From Politechbot:

The head of the National Security Agency said last week that Congress might want to aim the most powerful surveillance system in the world at American citizens.

Lt. Gen. Michael Hayden, in a rare public appearance before the Senate Intelligence committee, said the ongoing terrorist threat means America needs to debate where to draw the line between foreign and domestic surveillance. Currently the NSA is prohibited from spying domestically.

Here's an excerpt:

"Where do we draw the line between the government's need for (counter-terrorism) information about people in the United States and the privacy interests of people located in the United States? This line-drawing affects the focus of NSA's activities, foreign versus domestic... the type of data NSA is permitted to collect and how, and the rules under which NSA retains and disseminates information about U.S. persons."

Until the 1970s, when the Senate's Church Committee revealed what had been going on in secret, the CIA and the NSA conducted illegal surveillance on American citizens. In response, Congress enacted a series of reforms, notably the Foreign Intelligence Surveillance Act.

"These are serious issues that the country addressed, and resolved to its satisfaction, once before in the mid-1970's," Hayden said. "In light of the events of September 11th, it is appropriate that we, as a country, readdress them. We need to get it right."

PDF of Hayden Testimony