impending war
It actually makes sense if you do take into account pending war against Iraq. If the level is orange when war starts, the only place it can go is to red, "attack is imminent". The idea is to have the terrorist threat level low when Bush's war starts so that there's room to move it to orange.
Though, if speculation is correct that war with Iraq will awaken sleeper cells, then red is in fact the appropriate level. Personally I think it's likely. The American people will pay a heavy price for Bush's war.
--Robert