The bill from Senate Homeland Security Committee Chairman Joe Lieberman, a Connecticut independent, originally proposed government-issued computer security standards for privately owned infrastructure, such as electrical and water systems, considered essential to national security. It also promoted information sharing about cyber threats between businesses and the U.S. government.

Last month, Lieberman and his co-sponsors sought to attract Republican support by revising the measure, replacing mandatory security rules with a system for developing voluntary industry standards, with incentives for companies to adopt them.

The Senate's Republican leadership, the U.S. Chamber of Commerce and other business groups opposed the legislation even with the changes, saying the voluntary infrastructure standards would be a back door to later imposing government regulations.

“Between business pressures and electoral pressures, there's no way they're going to get to anything useful,” James Lewis, technology program director at the Center for Strategic and International Studies, said in an interview. “The game now will be each side blames the other.”

Obama may be able, by executive order, to accomplish some of the legislation's goals, said Baker, now a partner at the Steptoe & Johnson law firm in Washington.

'Profound Disappointment'

Jay Carney, the White House press secretary, in an e-mailed statement yesterday blamed the Senate vote on “the politics of obstructionism, driven by special-interest groups seeking to avoid accountability.”

Cyber attacks on U.S. computer networks increased 17-fold from 2009 through 2011, General Keith Alexander, director of the National Security Agency and the U.S. Cyber Command, said last month, citing reports that digital adversaries have stolen $1 trillion of U.S. intellectual property.

Citigroup Inc., the third-largest U.S. bank by assets, and Lockheed Martin Corp., the world's largest defense company, were among U.S. companies that suffered cyber attacks last year.

“It's not just another political argument in a campaign,” Lieberman told reporters after yesterday's vote. “This is about what everyone acknowledges is rising to be a serious threat to America's security in the years ahead.”

Lieberman said he wasn't optimistic about the bill's chances, though he said he's open to further negotiations on amendments.

A co-sponsor, California Democratic Senator Dianne Feinstein, said backers would continue to seek an agreement during the August break. “Either it's done by September, or we're not going to be able to do it,” she said.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, said before the vote that Majority Leader Harry Reid was trying to “steamroll” the bill past opponents seeking to vote on amendments. Reid, a Nevada Democrat, said Republicans are “running like scared cats” to please the Chamber, the largest business lobbying group.

Five Republicans crossed party lines to vote in favor of proceeding with the bill, and five Democrats sided with Republicans in blocking the measure. Reid also voted no for procedural reasons, so he can later bring up the bill for reconsideration.

A cybersecurity measure that passed the Republican- controlled House of Representatives in April focuses on cyber- threat information sharing without setting standards for companies. It is sponsored by Representative Mike Rogers, a Michigan Republican who leads the House Intelligence Committee.

Carney described the House bill as “deeply flawed,” saying it threatens the privacy of consumer data and does nothing to protect the nation's infrastructure.

Lieberman's bill is S. 3414. Rogers's bill is H.R. 3523.

Bloomberg News

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