Pentagon battiness
EDITORIALS
Arizona Daily Star

30 July 2003
The Arizona Daily Star
B6

In a city in which crackpot ideas are so common they have to take numbers 
and stand in line, this idea managed to break away from the crowd: The 
Pentagon planned to sell futures contracts on terrorist attacks.

Think the Israeli prime minister will be assassinated by year's end? Or a 
coup will occur in Jordan? Or North Korea will launch a nuclear missile 
strike? Then buy a futures contract on the event. If it actually happens, 
you cash in. If it doesn't, then the seller of the contract cashes in.

As bizarre as the plan seems, Pentagon officials saw it as a way to use 
financial markets to help predict future events.

"Research indicates that markets are extremely efficient, effective and 
timely aggregators of dispersed and even hidden information," said the 
Defense Department in a statement as it initially defended the program. 
"Futures markets have proven themselves to be good at predicting such things 
as elections results; they are often better than expert opinions."

The Pentagon already has spent about $750,000 on start-up costs and was 
seeking $8 million to expand the project.

But once two Democratic senators made the plan public, Bush administration 
officials quickly quashed it.

"I share your shock at this kind of program," Deputy Defense Secretary Paul 
Wolfowitz told the Senate Foreign Relations Committee. "It is being 
terminated." Wolfowitz said he learned of the program through the news 
accounts.

In the meantime, The New York Times reported that the White House acted to 
alter the program's Web site so that the potential events to be considered 
would no longer be visible to the public.

The senators, Ron Wyden of Oregon and Byron Dorgan of North Dakota, rightly 
had called the program morally repugnant and grotesque. They were joined in 
their criticism by others, including Sen. Bill Frist of Tennessee, the 
Republican majority leader. "I cannot conceive of any reason why the United 
States should be involved in a project of this nature," Frist wrote in a 
letter to the heads of the Senate appropriations and foreign relations 
committees.

In the midst of this controversy, it remains murky how Pentagon officials 
came to believe the investors would have more insight than anybody else into 
what terrorist strikes might occur. And it is surprising that people in the 
so-called "intelligence" community could be so tone-deaf about how their 
proposal would sound to the public.

But then, this is just the latest in a series of missteps by Pentagon 
programs under the direction of Adm. John Poindexter. First, there was the 
proposal that a Pentagon office would issue misleading and inaccurate 
information through carefully controlled "leaks" and high-powered public 
relations campaigns. The public outcry, including editorials saying it isn't 
nice to lie, caused Pentagon officials to back away.

Then Poindexter's office proposed a massive "data mining" program, in which 
it would spy electronically on Americans to find potential terrorists. It 
would have involved shifting through computer databases of medical, travel, 
credit and financial records. The program still exists, but its hold on life 
is tenuous. Congress has prohibited it from being used against Americans. 
And the Senate has agreed to block all money for it.

Now, with this latest development, it seems clear that Congress needs to 
look more carefully at the Pentagon - to see what other batty ideas it has 
in its belfry.