If the need were really so pressing, then private enterprise is more than capable of creating a highly secure operating system to be marketed to the NSA. And in practice, I'm sure this happens -- although I doubt that linux is the core... It's more likely some proprietary flavor of unix.
Government funded forays into the commercial software marketplace aren't the answer. And in those rare instances where the govt has a legitimate need to develop code, it should focus on producing code which EVERYONE can use -- public domain code (such as LINPACK, LAPACK, EISPACK,...), rather than GPL code (such as SE-Linux).
SE Linux was about research. You have a problem with our security agency doing research into computer security? Or do you have a problem that the research resulted in something coming directly back to the people rather than into the pockets of a corporation?
it should focus on producing code which EVERYONE can use -- public domain code (such as LINPACK, LAPACK, EISPACK,...), rather than GPL code (such as SE-Linux).
Whatever license or conditions they want to use, as long as the public reaps the benefits free of end costs.