There is also the mistaken belief that effective restriction of free thought is is possible through political/legal means. That strategy was ineffective against communism and remains ineffective today.
It makes mainstream dissent like Occupy very much harder - and that's not even thinking about how it would have influenced historical dissent like the Civil Rights or Anti-War Movements.
Commercially it also guarantees that the US has access to corporate secrets. If encryption is de facto illegal, how do you communicate commercially sensitive information?