Since 2001, the United States has created or reorganized more than two counterterrorism organizations for every apprehension it has made of Islamists apparently planning to commit terrorism within the country. Central to this massive enterprise is what the FBI frequently calls "ghost-chasing"-the efforts by police and intelligence agencies to follow up on over ten million tips. Less than one alarm in 10,000 fails to be false-the rest all point to ghosts. And the vast majority of the leads deemed to be productive have led to terrorist enterprises that are either trivial or at most...