Money fled to security sector after 9/11; anyone feel safe?
McCleod
Money fled to security sector after 9/11; anyone feel safe?
By Elliot Blair Smith, USA TODAY
Three years after the 9/11 terrorist attacks, Americans are clambering
to their feet like a dazed prizefighter put to the canvas. Sure, we'll
almost certainly win the brawl. But the USA is the new front line in a
global war. And, right now, the ring before us is still spinning. Just
how ready are we?
Joseph Atick, CEO of Identix.
By Steve Woit for USA TODAY
President Bush is asking Congress for $36.8 billion in homeland
security spending this year, up 10% from a year ago, to strengthen
domestic safeguards that barely existed three years ago. That comes
atop the administration's proposed 7% increase in defense spending to
$401.7 billion.
It is clear the convergence of money and fear is transforming how we
work and do business.
Taking into account anti-terrorism investments in private industry —
and more at the state and local levels — many defense and security
contractors say they cannot keep up with the crush of new business.
Yet burdens arising from 9/11 threaten to cause the collapse of some
airlines, bankers, insurers, many small businesses and transporters.
As we strive to balance our open society with desire for greater
security, the USA is struggling to prioritize and pay for new
safeguards. "These are big problems. They are complicated. They are
damn hard to fix," says Chris Stout, editor of the acclaimed
four-volume text Psychology of Terrorism and a consultant to security
provider Paladin International.
During a recent trip to Poland, Stout checked into Room 911 of his
hotel, providing him with a fresh reminder of broad, continuing
concerns. "It's really meaningless, an odd coincidence, but it made me
pause," he says.
Making America safe is an awesome task.
Each year, more than 500 million people, 130 million vehicles, 2.5
million rail cars and 5.7 million cargo containers traverse the
country's 95,000 miles of shoreline and navigable rivers and 7,500
miles of land border with Canada and Mexico. A "war games" exercise
conducted by Booz Allen Hamilton in October 2002 attempted to quantify
the economic mayhem that would ensue from a "dirty bomb" discovered in
a cargo container at the Port of Los Angeles.
Based on the chess moves of key decision makers who participated, the
estimated cost to the U.S. economy after 12 days of port closures was
$58 billion. The estimated time to unravel the transportation backlog:
three months.
Meanwhile, more than 600 million passengers fly on 89,000 domestic and
international flights. Yet U.S. airlines have accumulated tens of
billions of dollars in losses with no apparent cure short of
bankruptcy. Exhausted Transportation Security Administration
inspectors are working 50-hour weeks to contend with long lines of air
travelers and a hodgepodge of airport security equipment that
congressional critics say is awkward and inadequate.
With tempers fraying, Hispanic American pilots mistaken for Arab
Muslims forcibly were removed from some commercial flights by panicky
crews in the days immediately after 9/11. Even a sunburned American of
Norwegian and Italian descent, and a space lab worker of Jordanian
descent with Pentagon security clearance, received the heave-ho,
according to passenger complaints filed with the Department of
Transportation.
Today, the nation's ports are neither fully open nor shut,
contributing to cargo backups and security breaches. Post-9/11
immigration controls have cost U.S. businesses $30.7 billion in
squandered opportunities, according to the American Council of
International Personnel.
And the insurance industry, which shouldered losses of about $30
billion after 2001 — equal to 10 major hurricanes, says Ball State
University researcher John Fitzgerald — is now reluctant to offer
terrorism insurance without federal guarantees, scheduled to expire
next year. Even with federal guarantees, insurers would be exposed to
large uncovered liabilities in the event of another terrorist attack,
according to the National Bureau of Economic Research.
Impact of 9/11
USA TODAY asked several Americans at the front line in the war on
terrorism — people whose businesses are rebounding from the 9/11
attack, or whose work is to deal with the threat — to identify how
their lives have changed.
• Monica and John Anderson, owners of Black Watch Productions, in New
York, who film commercials and corporate videos, say they plan to sell
their prize office loft in Manhattan and move to cheaper digs in New
Jersey after enduring myriad new business hurdles and a decline in
clients who want to film in the Big Apple.
• Joseph Atick, CEO of Identix, in Minneapolis, a developer of
security technology that empowers computers to recognize human beings,
says investors and the government looked to his emerging industry as a
quick fix after 9/11 but did not show the patience required for
"biometrics" technology to develop. "The market expected that within
weeks, billions of dollars would be going into this industry, and
revenues (would) skyrocket," he says. "Three years later, none of
these ideas have gone to full production."
• Denise Bode, chairman of the Oklahoma Corporation Commission, whose
office regulates 70% of that state's economy, says that the nation's
"critical infrastructure" — oil and gas pipelines, power plants,
telecommunications lines and water supply systems — is a potential
terrorism target, but that not enough has been done to protect these
essential resources.
"Now, we're not only concerned about the reliability" of the USA's
utilities, Bode says, "but protecting that crumbling infrastructure
from an attack by terrorists or bad actors."
These are the faces, and voices, of a conflict that reaches into every
corner of the nation. In January, a poll by the National Association
of State Mental Health Program Directors found that "most Americans
are resigned to the belief we will suffer another attack."
Terrorism was a significant concern of about two-thirds of surveyed
adults.
Fears were expressed almost uniformly across all age groups, among
those with and without college degrees, and by earners who make both
less than $35,000 a year and more. The perception of a threat was
almost identical in urban and rural areas, and slightly elevated in
the suburbs.
'Smart' borders, safe ports
To better defend America, the U.S. is investing in manpower and
technology to develop "smart" borders and safer ports. Government
contractors are working on a futuristic "bioshield" defense against
biological warfare.
More than 90% of U.S. chemical producers have adopted comprehensive
security codes to protect against a chemical attack. All or most major
water utilities have produced vulnerability assessments and emergency
response plans. And the Federal Aviation Administration says it is
upgrading air-traffic control security.
For all that, the new barriers are costly, insufficient and probably
damaging to the economy's long-term prosperity.
Cato Institute analyst Alan Reynolds says, "If you break enough
windows there's a lot of work for people who replace windows. But
military outlays are pretty much just a drag on the economy because
they don't produce anything we can use — housing, food, clothing — yet
they have to be paid for by taxes or borrowing."
Reagan administration economist Murray Weidenbaum affirms, "If you
build a new factory, you can look forward to a flow of goods and
services. If you put the same dollars in tanks and aircraft missiles,
you might have a future flow of protection in terms of national
security, but there's not going to be any economic benefit."
On a recent ferry trip outside Seattle, security consultant Geoff
Craighead, a vice president of Securitas USA, says he was struck by
the heightened sense of paranoia about him. "I really had the sense we
were living in a state of war," he says. "I really sense that in
society. People are very, very much aware — more aware — of the
situation we are in."
One of USA TODAY's "front-liners," Darryl Mobley, publisher of Family
Digest magazine, in San Francisco, says he confronts the new reality
every day.
Mobley, whose publications are marketed to African-Americans, says he
had "everything lined up" with several national advertisers for a
breakthrough year in 2001. But, he frets, "When things get tight,
targeted media is the first to get cut. ... It's like you're the last
in and the first out."
Today, Family Digest is rebounding, but Mobley says he travels less
than before, his clients are more security conscious and the laughs
don't come as easily.
Observing that his office used to post crank letters on a bulletin
board under the rubric, "Why we lock our doors," Mobley laments, "Now,
that saying, that was once purely funny, is for real."
Contributing: Marilyn Adams, Jim Hopkins, Debbie Howlett, Gary Stoller
http://www.usatoday.com/money/2004-09-10-sept-11-cover-money_x.htm