Unbelieveable.

Back in 1999, the NSA developed a phone/email "monitoring" program (called ThinThread) that was (a) more efficient than the (illegal) wiretapping program they have now; and (b) had technology that "provided a simple solution to privacy concerns".  This involved encrypting the phone numbers before it got to analysts.  Then, if something got red-flagged, the intelligence officials would get a (judicially-approved) warrant to decrypt the phone numbers, and proceed from there.

It was scrapped due to "bureaucratic infighting".  After 9/11, it was revived in a watered-down version — without the privacy concern prong.  The Baltimore Sun has the scoop:

A number of independent studies, including a classified 2004 report from the Pentagon’s inspector-general, in addition to the successful pilot tests, found that the program provided "superior processing, filtering and protection of U.S. citizens, and discovery of important and previously unknown targets," said an intelligence official familiar with the program who described the reports to The Sun. The Pentagon report concluded that ThinThread’s ability to sort through data in 2001 was far superior to that of another NSA system in place in 2004, and that the program should be launched and enhanced.

Kevin Drum sums it up nicely:

The story here is that (a) ThinThread was awesome but was killed in favor of Trailblazer, (b) Trailblazer was eventually killed too, (c) a similar program was put in place after 9/11, but without the privacy safeguards, and (d) the new program doesn’t work worth a damn.