The government does monitor much of what the citizens do. They employ many private contractors to make technologies to help see what the people are doing. Recently with the Petraeus issue it has become more clear that the government can easily see what we are doing and they are constatnly asking companies to see what records they have of peoples actions.
There are many laws that are outdated in relation to government involvement in personal technologies that will soon come before congress so that they can set new laws for the people. The government has also started to try to censor many things online and to stop piracy but they have been faced with largescale opposition from people thinking it infringes on their right of speech.