I've been following this issue for a while and was pretty surprised to conclude that the government doesn't have much choice. The way data travels means the entire country's far too vulnerable to cyberattacks, and they don't really have many effective options that don't to some degree compromise our privacy. The question is, who can we trust with that kind of power? We need a robust public debate over that very issue, but since they dumped this on the last day before a three-day weekend, I'm guessing not so much:

The Obama administration will proceed with a Bush-era plan to use National Security Agency assistance in screening government computer traffic on private-sector networks, with AT&T as the likely test site, according to three current and former government officials.

President Obama said in May that government efforts to protect computer systems from attack would not involve "monitoring private sector networks or Internet traffic" and Department of Homeland Security officials say that the new program will only scrutinize data going to or from government systems.

But the program has provoked debate within DHS, the current and former officials said, because of uncertainty over whether private data can be shielded from unauthorized scrutiny, how much of a role NSA should play and whether the agency's involvement in warrantless wiretapping under the Bush administration would draw controversy.

[...] Under a classified pilot program approved during the Bush administration, NSA data and hardware would be used to protect the networks of some civilian government agencies. Part of an initiative known as Einstein 3, the pilot called for telecommunications companies to route the Internet traffic of civilian government agencies through a monitoring box that would search for and block malicious computer codes.

AT&T, the world's largest telecommunications firm, was the Bush administration's choice to participate in the test, which has been delayed for months as the Obama administration determines what elements of the Bush plan to preserve, former government officials said. The pilot was to have been launched in February.

"To be clear, Einstein 3 development is proceeding," DHS spokeswoman Amy Kudwa said. "We are moving forward in a way that protects privacy and civil liberties."

[...] The program is the most controversial element of the $17 billion cybersecurity initiative that the Bush administration launched in January 2008. Einstein 3 is crucial, advocates say, in an era in which hackers have compromised computer systems at the Commerce and State departments, and have siphoned off sensitive military jet data from a defense contractor.