1. The Federal Govt has proven itself to be too corrupt and incompetent to properly administer these "watch lists", regardless if it's the FBI, IRS, NSA, DHS or any other alphabet division doing the watching.
I think corruption plays a part, but there are 19 different federal agencies that are coming up with criteria and nominating names for the various watch lists (some of which have their own separate lists) that fall under the blanket Terrorist Watch List. The No Fly List is a part of the bigger list.
The No Fly List has ballooned from about 10,000 names in 2010 to well over 50,000 names currently. The larger Watch List began bloating under Bush at about 300,000 names in 2006 but has exploded under Obama to an estimated 1.8 to 2.1 million names, with about 7% of those being US citizens with no ties whatsoever to terrorism, including 6 year old girls, Cubs Scouts, 93 year old great-grandmothers, members of Congress, and investigative journalists who write unflattering articles about the TSA.
There isn't been a single national list of anything that the federal government has been able to competently manage (including the list of National Parks where they once published a complete list of Parks with 7 of them missing, and had one National Recreation Area listed as a National Park).
Democratic Congressman John Lewis, the Civil Rights icon, was himself wrongly placed on the list in 2004, was stopped in airports more than 40 times by security, and couldn't get himself off the list until a second face-to-face meeting about it with Tom Ridge. It was that same John Lewis who led the Democrats in their sit-in to get legislation passed to prevent people on the No Fly List from being able to purchase a gun. I find that both hilarious, and face-palm befuddling.
Everything the federal government touches they somehow manage to screw it up, to make it worse, and to spend obscene amounts of money doing so. A terror watch list is no different. I'm going with straight up incompetence.