This is against the law. I have put references to the relevant statute below the fold; the brief version is: the law forbids warrantless surveillance of US citizens, and it provides procedures to be followed in emergencies that do not leave enough time for federal agents to get a warrant. If the NY Times report is correct, the government did not follow these procedures. It therefore acted illegally.
Bush's order is arguably unconstitutional as well: it seems to violate the fourth amendment, and it certainly violates the requirement (Article II, sec. 3) that the President "shall take Care that the Laws be faithfully executed."
I am normally extremely wary of talking about impeachment. I think that impeachment is a trauma for the country, and that it should only be considered in extreme cases. Moreover, I think that the fact that Clinton was impeached raises the bar as far as impeaching Bush: two traumas in a row is really not good for the country, and even though my reluctance to go through a second impeachment benefits the very Republicans who needlessly inflicted the first on us, I don't care. It's bad for the country, and that matters most.
But I have a high bar, not a nonexistent one. And for a President to order violations of the law meets my criteria for impeachment. This is exactly what got Nixon in trouble: he ordered his subordinates to obstruct justice. To the extent that the two cases differ, the differences make what Bush did worse: after all, it's not as though warrants are hard to get, or the law makes no provision for emergencies. Bush could have followed the law had he wanted to. He chose to set it aside.And this is something that no American should tolerate. We claim to have a government of laws, not of men. That claim means nothing if we are not prepared to act when a President (or anyone else) places himself above the law.
I personally am not going to throw around impeachment -- I think it's now permanently tarred as a device of partisan hackery, be that true or not. But the point is valid: in my pragmatism, I have no problem with the actual activity set out in the stories. It's the fact that there is a process in place to avoid abuse and that process was completely circumvented that worries me to no end. As soon as the law becomes inconvenient ...
Much like when the President mis-spoke the other day and said "It's the President's job to decide when to send in the troops" (No, that's Congress' job. It says so in a little thing we like to call the Constitution, Article 1 Section 8), the disconnect between how people seem to think the government should work, believe it does work, how it's actually designed to work, and how it actually works has reached a critical mass. Personally I blame shitty 6th grade Social Studies teachers. We should round them up and inter them all without due process. And what's terrifying is that there is a precedent for just such an act.
But this is the fundamental question people need to be asking themselves: is this how they think the government should work? If the answer is "yes", then fine, you feel free to live in whatever version of America you want, but don't pretend it is in any way related to the one set out in the Constitution, or even the one defined by common sense. Just go back to calling the rich folk "Your Lordship" and sleep better at night. If the answer's "no", well then, you have to decide if keeping the gay folk from marrying or disdain for universal healthcare and/or Michael Moore is worth living in a police state.
Oh, and by the way, for those of you who use a certain argument against gay marriage -- THIS is what a "slippery slope" looks like in the real world.