Thats the problem: You assume you're being spied on. You fail to realize that the huge amounts of information that are collected and need to be analyzed wouldn't allow for someone to just sit around and spy on all 310 million Americans.
I recently did a search on Google for a particular type of product and now I see adverts for that type of product popping up on various websites that are not related to that product or connected to Google directly. Now thousands of people may know about my interest in that product. Many of those people probably also know about my interest in other types of products and other interests as revealed by my history of Google searches, the YouTube videos I watched, my Facebook activity, and at least some of the other websites I visit. Someone with access to just my Google database can know more about me than my brother knows.
The government can access that same info and combine it with my telephone and utilitiy records, e-mail history, property records, criminal record, driver's license and vehicle registration info, public school records, social security and tax records. Much of that information is accessible by anyone. (as seen by the targeted junk mail you get) Anyone with access to all that info can know more about me than my spouse.
With nearly everyone in the system there is so much data that there is a very slight possibility that any one individual is going to be selected for deeper investigation. The technology required to make sense and practical use of all that raw date is still relatively primitive compared to its potential. That is why the supporters of a surveillance state reassure us that we are not likely to be targetted. However, all that information compiled on nearly everyone in the USA in a sophisticated database can find connections between people and organizations and detect all sorts of trends and tendencies.
Read the news stories on how the Chinese government is using information on citizen's internet use. I don't think it is at all farfetched to say that our government has the ability to disrupt political movements such as Occupy or the Tea Party before they even get started. They can potentially use their massive information database in conjunction with old fashioned investigative work, political dirty tricks, Cointel type tactics and advertisng/marketing techniques to acheive virtually any type of political, social or marketing goal. If they can't do it right now, they will be able to do it in the near future.
With that much power in the hands of government, democracy becomes a farce. Perhaps it is not being abused yet. But all it will take is one person with a high level of access and a malicious or misguided agenda for many lives to be ruined. Mistakes will be made. Technology and privileges will be abused. Power and money will corrupt government officals. Bad, mentally ill or misguided people will be in positions of power.
You don't have to believe that there is any kind of evil plan or bad people in power at this time to conclude that this is too much power for any small group of people to have. It is akin to nuclear weapons. We are fortunate that, thanks to a lot of security and prevention effort, there have not been any nuclear wars or terrorist use of nuclear weapons yet. But the level of risk is proportional to the number of weapons that exist, no matter how hard we try to keep things under control.