This is very worrisome indeed.
White House Watch - Obama's State Secrets Overreach: There are two things you really need to know about the "state secrets" privilege.
The first is that the government lied in the 1953 Supreme Court case that established the government's right not to disclose to the judicial branch information that would compromise national security. The widows of three civilian engineers who died in a military airplane crash sued the government for negligence. The government refused to turn over records, citing national security. But some 50 years later, when the records in question were made public, there were no national security secrets in them, just embarrassing information establishing the government's negligence. (More about the case here.)
The second thing is that the way the state secrets privilege has typically worked since then is that the government can refuse to publicly disclose a specific item of information if it explains why to the judge. The idea is not that government officials get to tell a judge to dismiss an entire case because they don't want to answer any questions at all. But it is precisely such a sweeping assertion that the Justice Department -- the Obama Justice Department -- is making in three cases that relate to torture and warrantless wiretapping. There is something utterly un-American about saying that the executive branch can simply tell the judicial branch to butt out of a matter for national security reasons -- and there's no recourse. And as for these cases, even if the government is worried about legitimate national security concerns -- rather than just afraid of embarrassment -- there is so much in the public domain already about the related issues that government officials should at least be able to talk about what they can't talk about. People who put a lot of faith in President Obama's pledges of restoring transparency to the government are having a hard time rationalizing his Justice Department's actions on the three cases in question...