Marin Independent Journal (Marin, CA) July 30, 2003 Wednesday SECTION: NATION/WORLD LENGTH: 1005 words HEADLINE: Terrorism program killed amid uproar BODY: Both parties rip futures market WASHINGTON - The Pentagon's new terrorism futures market is suddenly a thing of the past. Only a day after it was disclosed, outraged senators of both parties called yesterday for the immediate end to the online trading bazaar that would have rewarded investors able to predict terror attacks and other global unrest. Pentagon officials raced to oblige, saying it would be shut down post haste. "It is a very significant mistake," said Sen. John Warner, R-Va., and chairman of the Armed Services Committee, which oversees the Department of Defense. Democrats said the cancellation of the program was not enough and that those responsible for it should be fired. Attention immediately turned to retired Rear Adm. John M. Poindexter, a key official involved in developing the plan. Poindexter first gained notoriety in the Iran Contra scandal during the Reagan administration and more recently was involved in a controversy over a Pentagon program for extensive electronic surveillance of computer records in the search for terrorists. "That is two strikes now," Warner said. "Do you have to throw a third strike?" Poindexter did not respond to requests for comment. Two Democratic senators, Byron Dorgan of North Dakota and Ron Wyden of Oregon, revealed the futures program Monday. Under the Pentagon plan, traders were to be able to begin registering Friday to trade futures in Middle East developments as of Oct. 1 on a Web site of the Policy Analysis Market, which the Pentagon was operating with private partners. At a Senate hearing yesterday morning, Deputy Defense Secretary Paul Wolfowitz said he first learned of it from news accounts. "I share your shock at this kind of program," Wolfowitz said. "We'll find out about it, but it is being terminated." Warner and his colleagues summoned the head of the Defense Advanced Research Projects Agency, where the market idea was developed, to the Capitol to explain how the concept originated. The director, Tony Tether, put out a statement, saying that the program was finished, effective immediately. "Our job at DARPA is to explore new ideas and this is an idea that was not going to work out," he said. Warner and other senators responsible for overseeing Defense Department spending moved quickly to disassociate themselves from the program, and they promised hearings and much more aggressive oversight of the research arm of the Pentagon. They said they had never been told any details of the $3 million program, which they harshly criticized as ill-conceived and unwarranted. "It is totally unauthorized as far as we are concerned," said Sen. Ted Stevens, R-Alaska and chairman of the Appropriations Committee. "No funds should have been used for it at all. It's really a serious mistake on the part of DARPA." Democrats said cutting off the money to this specific initiative was not enough. "I think those who thought it up ought not only close down the program, they ought not be on the public payroll any longer," Dorgan said. He and Wyden said the brouhaha over the market plan should give momentum to their push to cut off all money flowing to the Terrorism Information Awareness effort being run out of DARPA. That program, originally called Total Information Awareness, was described by Poindexter as a way of forestalling terrorism by tapping into computer databases to collect medical records, travel records, credit records and financial data. Worried about privacy concerns, Congress earlier this year prohibited it from being used against Americans. "This Poindexter program is still a runaway horse that needs to be reined in," said Wyden. Republican lawmakers said the uproar over the marketing plan could jeopardize congressional support for DARPA programs though they were not ready to call for the end of the terrorism information effort. As for personnel changes, they said those decisions were the responsibility of Defense Secretary Donald Rumsfeld. But Sen. Pat Roberts, R-Kan., who serves on both the Intelligence and Armed Services Committee, called the market plan "absurd," and added, "It seems to me they are way off base and somebody should bear that responsibility and I think we know who that is." Poindexter was a central figure in the 1980s Iran-Contra scandal and was convicted of lying to Congress, though his conviction was later overturned. At the Pentagon, the chief spokes-man, Lawrence Di Rita, was asked about the status of the former naval officer and said, "At the moment, Admiral Poindexter continues to serve in DARPA." The Pentagon market website was the first step in a broader program entitled Futures Markets Applied to Predictions. In statements over the past two days, DARPA said the idea behind the project was to use a marketplace to assess the probability of events, a concept that has worked with predictions in such matters as commodity prices and elections. Examples of potential events on the website included the overthrow of the king of Jordan, a missile strike by North Korea or the assassination of Yasser Arafat. While some lawmakers said they understood the fundamental idea behind the project, they said it clearly crossed a line given the ongoing effort against terrorism and the war in Iraq. "I cannot conceive of any reason why the United States government should be involved in a project of this nature," Senate Majority Leader Bill Frist said in a letter to lawmakers responsible for Pentagon spending, urging that they cut off any aid to the market project. Democratic Leader Tom Daschle was harsher. "I am troubled, alarmed, just amazed that anybody with positions of responsibility and authority would suggest that we do things of this nature," he said. Warner and others said DARPA, which is credited with creating the forerunner to the Internet among other innovations, has proved its value in the past, but they said this plan was out of bounds. "It sounds like maybe they got too imaginative in this area," Wolfowitz said.