We know they do it. They know we know they do it. But they still cannot acknowledge it. It is just how things work.
When the Wikileaks leak happened, there was an article (or comment on HN) about how seemingly obvious things are still classified. Say that US govt. knows about the crimes some dictator is committing against his own people. The locals in that country know it (and experience it). The world, including US citizens know it or can very easily find out, yet the fact that US government knows is classified.
The reason is because an official acknowledgement would also demand some sort of official denouncement or some other similar action in order to maintain a certain propaganda-ready image (universal support for human rights, democracy & freedom promotions etc etc)
There are seemingly obvious things that are classified for valid reasons, too. Sometimes the motivation is not to shield the information itself or propaganda-driven feigned ignorance, rather what matters is protecting the classified source from which the information was obtained.
This still only applies to a small portion of classified material, much of which is simply subject to classification inflation.
I personally assume that they're collecting everything, but analyzing very little. Just a quick grep on some key terms for some communications of interest, for some possibly very odd value of "interest".
They can always go back and analyze later.
Old-time "usenet" users have to assume that all of usenet got hoovered up while it was going on, and that material is pretty carefully indexed and categorized. Any participants of "alt.tasteless", for example, should never run for major office, as whatever they posted will come back to haunt them. By "haunt them", I mean that once elected, they may get their arms twisted on critical issues. Let's recall what happened to Representative Jane Harman (http://www.thedailyshow.com/watch/tue-april-28-2009/your-gov...) - Harman "was caught on wiretap, but not punished, so as not to erode her support for wiretaps."
That guy that posted all that gay pr0n to the straight-pr0n groups in the early 90s had better watch his back, too.
Yeah, you run into a fundamental noise:signal issue.
The idea is probably there is a small subset that is analysed pretty heavily and a lot else that's just retained on the theory it might be of interest someday.
The danger though is it allows a bit of a "show me the man and I'll find you the crime" mentality....
Well, we know about Jane Harman, and we know about J. Edgar Hoover's files on just about all USA Congress members. I believe your "danger" is an actual problem. That sort of thing really undermines representative government.
It is the actual problem. It is what is supposed to separate a government of laws from a government of men. Indeed, the quote came from Stalin's government....
I assume they're collecting everything, but I'm not quite sure if I'm ready to buy that they're analyzing everything (beyond maybe a cursory inspection to classify traffic type very generally).