As the movie opens, Congress is close to passing legislation to expand surveillance powers of law enforcement agencies. Congressman Phil Hammersley (Jason Robards, uncredited) is trying to stop the bill because he believes it is an invasion of privacy, while Thomas Reynolds (Jon Voight) is trying to push the bill through to confront growing terrorist threats against the U.S.--and advance his own career. Hammersley, on making it clear he won't reconsider, is then killed with a syringe to the neck near a lake by David Pratt (Barry Pepper), one of two rogue NSA agents loyal to Reynolds, who plant a bottle of heart medication near the body to make the death seem like a heart attack. However, a video camera set up by wildlife researcher Daniel Zavitz (Jason Lee) to monitor geese migration caught the entire incident.


When Zavitz views Hammersley's murder, he realizes that the news reports of a sudden heart attack are false and sends word to a friend of his, an anti-war activist and underground journalist. Zavitz is unaware that another of Reynolds' agents saw him retrieve the tape from the video camera, alerting them that Zavitz could have possibly videotaped the murder. He copies the tape onto a computer cartridge, and when NSA agents arrive, he hides the tape in a TurboExpress and escapes. Tracked by satellite and pursued by NSA agents, Zavitz bumps into an old friend from Georgetown University, labor lawyer Robert Clayton Dean (Will Smith) who is in a lingerie store shopping for a gift for his wife.


Dean had just come from a meeting with mafia members who control a labor union he is representing and beat up one of the members for not toeing the line. He had raised their ire by showing them a videotape of Pintero (Tom Sizemore) consorting with union officials, in violation of his parole. Pintero threatens to kill Dean within a week if he does not give them the name of the source.


While Dean hands Zavitz his business card, Zavitz drops the cartridge with the murder footage into Dean's shopping bag (without Dean's knowledge) and then flees. Pursued by NSA agents, Zavitz jumps onto a bike and rides down a busy street, where he is hit and killed by a firetruck. After finding Dean's business card on Zavitz's body, the agents visit Dean posing as detectives from the Metropolitan Police Department of the District of Columbia. Unaware that Zavitz gave him the video, Dean tells them he has no knowledge of their allegations that he was passed "sensitive materials," denying them access to his bags without a warrant. Dean then tries to find these materials, but unbeknownst to him, his son had already removed the device from his shopping bags.


The next day the NSA agents break into Dean's house looking for the tape. While they do not find it, they plant tracking bugs in his clothes and personal items. They also plant audio and video bugs throughout his house, while ransacking it to cover their tracks and bugs. The NSA smears him with a false story about a love affair with Rachel Banks, an old girlfriend who acted as an intermediary between Dean and her contact, the source of the mafia tape. He is fired from his law firm and thrown out of the house by his wife. When he attempts to check into a hotel for the night, he learns his credit cards have been canceled and somebody has stolen his attaché case.


The NSA monitor a meeting between Rachel and Dean at Mt. Vernon Square where they learn that Rachel knows someone named "Brill." They can't find anyone named "Brill" but they manage to have Dean meet with someone who claims to be "Brill," but is in actuality an NSA agent (Gabriel Byrne) who was to bring him back to Reynolds's team. While in a taxi, the agent verbally slips up, alerting Dean to who he really is. But before the agent can kill Dean, a truck driven by the real "Brill" (Gene Hackman) smashes into their taxi, allowing Dean to escape.