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A multibillion-dollar information-sharing program created in the aftermath of 9/11 has improperly collected information about innocent Americans and produced little valuable intelligence on terrorism, a Senate report concludes. It portrays an effort that ballooned far beyond anyone's ability to control.

What began as an attempt to put local, state and federal officials in the same room analyzing the same intelligence has instead cost huge amounts of money for data-mining software, flat screen televisions and, in Arizona, two fully equipped Chevrolet Tahoes that are used for commuting, investigators found.

The lengthy, bipartisan report is a scathing evaluation of what the Department of Homeland Security has held up as a crown jewel of its security efforts. The report underscores a reality of post-9/11 Washington: National security programs tend to grow, never shrink, even when their money and manpower far surpass the actual subject of terrorism. Much of this money went for ordinary local crime-fighting.

Disagreeing with the critical conclusions of the report, Homeland Security says it is outdated, inaccurate and too focused on information produced by the program, ignoring benefits to local governments from their involvement with federal intelligence officials.

Because of a convoluted grants process set up by Congress, Homeland Security officials don't know how much they have spent in their decade-long effort to set up so-called fusion centers in every state. Government estimates range from less than $300 million to $1.4 billion in federal money, plus much more invested by state and local governments. Federal funding is pegged at about 20 percent to 30 percent.

Despite that, Congress is unlikely to pull the plug. That's because, whether or not it stops terrorists, the program means politically important money for state and local governments.

A Senate Homeland Security subcommittee reviewed more than 600 unclassified reports over a one-year period and concluded that most had nothing to do with terrorism. The panel's chairman is Democrat Carl Levin of Michigan, the ranking Republican Tom Coburn of Oklahoma.

"The subcommittee investigation could identify no reporting which uncovered a terrorist threat, nor could it identify a contribution such fusion center reporting made to disrupt an active terrorist plot," the report said.

When fusion centers did address terrorism, they sometimes did so in ways that infringed on civil liberties. The centers have made headlines for circulating information about Ron Paul supporters, the ACLU, activists on both sides of the abortion debate, war protesters and advocates of gun rights.

One fusion center cited in the Senate investigation wrote a report about a Muslim community group's list of book recommendations. Others discussed American citizens speaking at mosques or talking to Muslim groups about parenting.

No evidence of criminal activity was contained in those reports. The government did not circulate them, but it kept them on government computers. The federal government is prohibited from storing information about First Amendment activities not related to crimes.

"It was not clear why, if DHS had determined that the reports were improper to disseminate, the reports were proper to store indefinitely," the report said.

Homeland Security Department spokesman Matthew Chandler called the report "out of date, inaccurate and misleading." He said that it focused entirely on information being produced by fusion centers and did not consider the benefit the involved officials got receiving intelligence from the federal government.

The report is as much an indictment of Congress as it is the Homeland Security Department. In setting up the department, lawmakers wanted their states to decide what to spend the money on. Time and again, that setup has meant the federal government has no way to know how its security money is being spent.

Inside Homeland Security, officials have long known there were problems with the reports coming out of fusion centers, the report shows.

"You would have some guys, the information you'd see from them, you'd scratch your head and say, `What planet are you from?"' an unidentified Homeland Security official told Congress.

Until this year, the federal reports officers received five days of training and were never tested or graded afterward, the report said.

States have had criminal analysis centers for years. But the story of fusion centers began in the frenzied aftermath of the Sept. 11, 2001, attacks.

The 9/11 Commission urged better collaboration among government agencies. As officials realized that a terrorism tip was as likely to come from a local police officer as the CIA, fusion centers became a hot topic.

But putting people together to share intelligence proved complicated. Special phone and computer lines had to be installed. The people reading the reports needed background checks. Some information could only be read in secure areas, which meant construction projects.

All of that cost money.

Meanwhile, federal intelligence agencies were under orders from Congress to hire more analysts. That meant state and local agencies had to compete for smart counterterrorism thinkers. And federal training for local analysts wasn't an early priority.

Though fusion centers receive money from the federal government, they are operated independently. Counterterrorism money started flowing to states in 2003. But it wasn't until late 2007 that the Bush administration told states how to run the centers.

State officials soon realized there simply wasn't that much local terrorism-related intelligence. Terrorist attacks didn't happen often, but police faced drugs, guns and violent crime every day. Normal criminal information started moving through fusion centers.

Under federal law, that was fine. When lawmakers enacted recommendations of the 9/11 Commission in 2007, they allowed fusion centers to study "criminal or terrorist activity." The law was co-sponsored by Sens. Susan Collins and Joe Lieberman, the driving forces behind the creation of Homeland Security.

Five years later, Senate investigators found, terrorism is often a secondary focus.

"Many fusion centers lacked either the capability or stated objective of contributing meaningfully to the federal counterterrorism mission," the Senate report said. "Many centers didn't consider counterterrorism an explicit part of their mission, and federal officials said some were simply not concerned with doing counterterrorism work."

When Janet Napolitano became Homeland Security secretary in 2009, the former Arizona governor embraced the idea that fusion centers should look beyond terrorism. Testifying before Congress that year, she distinguished fusion centers from the FBI-led Joint Terrorism Task Forces that are the leading investigative and analytical arms of the domestic counterterrorism effort.

"A JTTF is really focused on terrorism and terrorism-related investigations," she said. "Fusion centers are almost everything else."

Congress, including the committee that authored the report, supports that notion. And though the report recommends the Senate reconsider the amount of money it spends on fusion centers, that seems unlikely.

"Congress and two administrations have urged DHS to continue or even expand its support of fusion centers, without providing sufficient oversight to ensure the intelligence from fusion centers is commensurate with the level of federal investment," the report said.

And following the release of the report, Homeland Security officials indicated their continued strong support for the program.

This week will be a big one for the campaigns of President Obama and Republican nominee Mitt Romney, with their first debate set for Wednesday and the September jobs report coming out on Friday.

Mark Zandi, chief economist with Moody’s Analytics, is expecting a gain of 130,000 jobs last month, with a bump in the unemployment rate to 8.2 percent from 8.1 percent.

That number is unlikely to tip the scales in a fundamental way, but both campaigns will be eagerly awaiting the numbers nonetheless.

A big miss would bolster Romney’s case that Obama has failed on the economy, while a strong number could provide yet another boost to Obama’s reelection hopes; the president already is seeing his poll numbers rising in crucial swing states.


Markets and campaigns will possibly get a sneak preview of Friday’s jobs number on Wednesday, when the ADP employment report — which has at times veered wildly from the official government figures — will show estimates for private-sector job growth last month.

The economy added a dismal 96,000 jobs in August. But the Labor Department said this week it had underestimated job growth between April 2011 and March 2012 by 386,000 jobs, a positive for Obama’s efforts.

While layoffs remain low, business groups have said they are wary of adding employees with the looming uncertainty of how Congress will deal with the looming fiscal cliff, a mix of spending cuts and expiring tax provisions set to go into effect next year.

Just two days prior to that report, the economy will take a different center stage, when Obama and Romney square off for their first debate.

The pair has been perpetually sparring on the campaign trail over the economy and jobs, and will now finally be able to address the issue in person.

At least half of the Denver face-off will be devoted to questions on the economy, with other segments set aside for health care and other governing issues.

Both sides will be eager to make their economic case.

Romney will argue the president has failed to get the economy moving, and that he has the answers to fix it.

Meanwhile, Obama will defend his record as overcoming the massive financial crisis and hammer Romney as having the wrong economic prescription, recycled from ideas that have failed in the past and led to the meltdown in 2008.

On Wednesday, the Federal Reserve will release the minutes from its latest policy-setting meeting. While the minutes detailing Fed debate always garner some attention, this newest edition should be particularly intriguing, as it will lay out the arguments made when the Fed decided to embark on its third and boldest round of “quantitative easing.”

All but one voting Fed official agreed to take on the new stimulus, which has the central bank buying up $40 billion of mortgage bonds until it sees substantial improvement in the labor market, assuming inflation remains in check. Analysts and wonks will be poring over the minutes for further clues on where the Fed plans on taking its new project.

Fed Chairman Ben Bernanke will deliver remarks on monetary policy on Monday in Indiana.

Elsewhere, World Bank President Jim Yong Kim will be paying a visit to the U.S. Chamber of Commerce on Monday. The nation’s largest business lobby is holding a day-long event to discuss economic and business issues facing Latin America and the Caribbean.

On Tuesday, the American Action Forum and the Progressive Policy Institute will join forces to discuss how Washington can overhaul the housing market.

Housing and Urban Development Secretary Shaun Donovan will open the event, followed by experts and economists opining on how to fix the nation’s mortgage market in the wake of Fannie Mae and Freddie Mac.

That same day, the Tax Policy Center will gather its own panel of experts to discuss the tax implications of the “fiscal cliff” coming at the end of the year. That will be preceded by a press briefing Monday on the center’s analysis of the tax consequences of going over the cliff.

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