Secretary Ridge: Good afternoon, ladies and gentleman. President Bush has told you, and I have reiterated the promise, that when we have specific credible information, that we will share it. Now this afternoon, we do have new and unusually specific information about where al-Qaeda would like to attack. And as a result, today, the United States Government is raising the threat level to Code Orange for the financial services sector in New York City, Northern New Jersey and Washington, DC.

Since September 11th, 2001, leaders of our commercial financial institutions have demonstrated exceptional leadership in improving its security. However, in light of new intelligence information, we have made the decision to raise the threat level for this sector, in these communities, to bring protective resources to an even higher level.

SEN. JOE LIEBERMAN (D), CONNECTICUT: I don't think anybody who has any fairness or is in their right mind would think that the president or the secretary of Homeland Security would raise an alert level and scare people for political reasons.

GOV. GEORGE PATAKI (R), NEW YORK: Well, there's no question that being at this heightened level of alert has cost New York State hundreds of millions of dollars.

MESERVE: Neighboring New Jersey says maintaining threat level orange costs $125,000 a day. And the city of Baltimore estimates its costs at $300,000 a week.

[W]we estimate that cities nationwide are spending nearly $70 million per week in additional homeland security costs due to the war and heightened threat alert level. If the war and/or threat alert level continue for six months, cities would incur nearly $2 billion in additional costs.

We stress that these costs come ON TOP OF existing homeland security spending already underway or planned since 9/11. In addition, this survey only asked cities about DIRECT costs, new money that had to be allocated for homeland security because of the war or threat alert. These figures do NOT account for the huge INDIRECT costs cities are experiencing.

''Anything that slows down the city in general has economic impact, and anything that affects the financial institutions that are still our most important industry also has an impact,'' said Ronnie Lowenstein, an economist who is director of the city's Independent Budget Office. ''It is hard to imagine that these kinds of warnings don't have any impact.''

Rob Kotch, who runs Breakaway Courier Systems, a business that like much of New York's economy depends on speed and mobility, put it another way.

''The cost of all this security is friction to the economy,'' Mr. Kotch said. ''You consider the cost of a driver is $45 an hour. Do the math. If you put a dollar amount on waiting time sitting in traffic for security checks, it can be huge.''

But what's more disturbing, perhaps even more than the new details of al-Qaida's twisted plotting, is the Bush administration's outing of an undercover al-Qaida agent in its rush to justify raising the terror alert. This move, whether politically motivated or rooted in incompetence has terrorism and security experts shocked and dismayed for the harm inflicted on intelligence operations against al-Qaida. CNN reports today that the administration "may have shut down an important source of information that has already led to a series of al-Qaida arrests" when officials revealed Muhammad Naeem Noor Khan's identity to journalists last week (Khan is the computer expert who "flipped" last month and was operating as a double-agent for the Pakistani government). Do we have so many plugged-in al-Qaida double agents that we can afford to lose one and with him all of his connections and leads? Of course not.

Juan Cole looks at the consequences: British intelligence agents scrambled last week to arrest 13 members of a London al-Qaida cell before they fled after learning  from the Bush administration!  that Khan had been arrested. "The British do not, however, appear to have finished gathering enough evidence to prosecute the 13 in the courts successfully," Cole writes. And even worse: 5 got away. "If this is true," Cole says. "It is likely that the 5 went underground on hearing that Khan was in custody. That is, the loose lips of the Bush administration enabled them to flee arrest. Of the 13 taken into custody on Aug. 3, two were released for lack of evidence and two others were 'no longer being questioned on suspicion of terrorism offences.'"

WASHINGTON — The Bush administration periodically put the USA on high alert for terrorist attacks even though then-Homeland Security chief Tom Ridge argued there was only flimsy evidence to justify raising the threat level, Ridge now says.

Ridge, who resigned Feb. 1, said Tuesday that he often disagreed with administration officials who wanted to elevate the threat level to orange, or "high" risk of terrorist attack, but was overruled.

His comments at a Washington forum describe spirited debates over terrorist intelligence and provide rare insight into the inner workings of the nation's homeland security apparatus.

Ridge said he wanted to "debunk the myth" that his agency was responsible for repeatedly raising the alert under a color-coded system he unveiled in 2002.

"More often than not we were the least inclined to raise it," Ridge told reporters. "Sometimes we disagreed with the intelligence assessment. Sometimes we thought even if the intelligence was good, you don't necessarily put the country on (alert). ... There were times when some people were really aggressive about raising it, and we said, 'For that?' "