Swiftly, Plan for Terrorism Futures Market Slips Into Dustbin
By CARL HULSE
WASHINGTON, July 29 — 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 today 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 posthaste.
"It is a very significant mistake," said Senator John W. Warner, Republican of Virginia, the chairman of the Armed Services Committee.
Democrats quickly pointed the finger at John M. Poindexter, a retired rear admiral who was a key official involved in
developing the plan.
"This Poindexter program is still a runaway horse that needs to be reined in," said Senator Ron Wyden of Oregon, one of the two Democrats who brought the plan to light on Monday.
Admiral Poindexter first gained notoriety in the Iran-contra scandal during the Reagan administration and more recently he oversaw a Pentagon program for extensive electronic surveillance of computer records in the search for terrorists.
"That is two strikes now," Mr. Warner said. "Do you have to throw a third strike?"
Admiral Poindexter did not respond to requests for comment left at the Pentagon.
Mr. Wyden and Senator Byron L. Dorgan of North Dakota disclosed the existence of the futures program on Monday, calling it grotesque.
Under the Pentagon plan, traders were to be able to begin registering on 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 this morning, Deputy Defense Secretary Paul D. Wolfowitz said he first learned of it from news accounts.
"I share your shock at this kind of program," Mr. Wolfowitz said. "We'll find out about it, but it is being terminated."
Mr. 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 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.
Mr. Warner and other senators responsible for overseeing Defense Department spending moved quickly to disassociate
themselves from the program, promising 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 Senator Ted Stevens, Republican of Alaska, the 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," Mr. Dorgan said.
He and Mr. Wyden said the uproar 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 developed by Admiral 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.
Admiral Poindexter was a central figure in the 1980's Iran-contra scandal and was convicted of lying to Congress, though his conviction was later overturned. At the Pentagon, the chief spokesman, Lawrence Di Rita, was asked about the status of the former Navy officer and said, "At the moment, Admiral Poindexter continues to serve in Darpa."
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 H. Rumsfeld.
But Senator Pat Roberts, a Kansas Republican who serves on both the intelligence and armed services committees, 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."
The Pentagon market Web site was the first step in a broader program titled 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 Web site included the overthrow of the king of Jordan, a missile strike by North Korea or the assassination of Yasir Arafat.
While some lawmakers said they understood the fundamental idea behind the project, they said it clearly crossed a line given the continuing 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," the Senate majority leader, Bill Frist, Republican of Tennessee, said in a letter to lawmakers responsible for Pentagon spending, urging that they cut off any aid to the market project.
The Democratic leader, Senator Tom Daschle of South Dakota, 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.
Mr. 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," Mr. Wolfowitz said.
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