I recall reading of the German state's response to the Baader-Meinhoff gang/Red Army Faction in the 70's. Germany - a state with mandatory ID Cards - created a massive computer database, (unique for its time) listing every German citizen, every home in Germany, every car, etc. They then used the information to squeeze the gang into tighter and tighter corners.
In response the gang became very proficient at identity theft, but eventually the computer tracked down all but those who fled to DDR or elsewhere.
I believe that the government think that they are going to do something similar, forgetting that terrorist methodolgies have moved on, and that most of our recent attacks have been by persons previously unknown to the security services and who don't seek to live to fight another day.
Milton Friedman's recollection of John Cowperthwaite's attitude sums it up best:
I met Cowperthwaite in 1963 on my next visit to Hong Kong. I remember asking him about the paucity of [government] statistics. He answered, "If I let them compute those statistics, they’ll want to use them for planning."We need more Cowperthwaites in our polity today.
If I recall correctly, one of the objectives of the Baader/Meinhoff gang was to force the German state into more and more repressive measures in the hope of provoking a kick back from the populace. It didn't work then and it doesn't appear to be working now - although Al-Qaeda have different motives.
That's a perfect illustration of why "terrorist" and "terrorism" are not very useful categories. The Red Army Faction followed a Bakhuninite programme and were trying to precipitate "the revolution". That isn't generally the aim of the violent nationalist movements who have formed the bulk of so-called terrorist groups; they mostly want to produce pressure to get political concessions. The Islamists are are more often involved in demonstrative actions in which they are trying to impress those they think ought to be on their side with the feebleness of the enemy and their superior resolution.