It's useful when discussing this topic to break the word "spy" down into more discrete terms to understand exactly what we are discussing.

I found this article to be useful in differentiating the various terms:

On its face, the document suggests that the U.S. government regularly collects and stores all domestic telephone records. I use the caveat because there are several ways to interpret it, assuming it is real. (It looks real.)

A few definitions: to "collect" means to gather and store; to "analyze" means that a computer or human actually does something with the records; to "intercept" means that a computer or human actually listens to or records calls.

... The NSA, under the FISA Amendments Act, is able to analyze metadata, like incoming and outgoing call records, so long as the Attorney General certifies that a particular set of information is useful for reasons of national security. Then, the NSA asks the Foreign Intelligence Surveillance Court to order that a company comply. As that bill was being ironed out, this step was requested by private companies because they wanted protection from lawsuits in case innocents — or millions of innocents — found that the NSA had gathered their call information.

My own understanding is that the NSA routinely collects millions of domestic-to-domestic phone records. It does not do anything with them unless there is a need to search through them for lawful purposes. That is, an analyst at the NSA cannot legally simply perform random searches through the stored data. He or she needs to have a reason, usually some intelligence tip. That would allow him or her to segregate the part of the data that's necessary to analyze, and proceed from there.

In a way, it makes sense for the NSA to collect all telephone records because it can't know in advance what sections or slices it might need in the future. It does not follow that simply because the NSA collects data that it is legal for the NSA to use the data for foreign intelligence or counter-terrorism analysis.

http://theweek.com/article/index/245228/the-fbi-collects-all...

This is written specifically about the telephone call metadata, but being able to differentiate exactly what is collected about Internet traffic would also aid this discussion. Unfortunately this would only be possible if the government was more transparent about what is being collected.