The Bush administration is deliberately choosing a less secure technology without justification. If there were a good offsetting reason to choose that technology over a contact chip, then the choice might make sense.
Unfortunately, there is only one possible reason: The administration wants surreptitious access themselves. It wants to be able to identify people in crowds. It wants to surreptitiously pick out the Americans, and pick out the foreigners. It wants to do the very thing that it insists, despite demonstrations to the contrary, can’t be done.