Personally, I don't think it is the US intelligence that is the real failure. They still have some of the best intelligence agencies in the world. With modern technology and new communications channels every day, monitoring covert terrorist activities is not an easy task. There are bound to be gaps and failures.
I think the real problem has been the administration and administrative policies. The Bush administration acted clearly in disregard of better advice. They used terror and war as a machine to fuel their interests and incomes.
The first declaration of war on terror was the right thing to do. Any decent country should be committed to focus its intelligence and military in stamping out terror organizations. In fact I am shocked that it took countries like France so many years to make that sort of commitment.
However, the priority for US should have been Al-Qaeda and Taliban in Afghanistan and finding Osama Bin Laden and all his cohorts. Before jumping the gun the administration should have sat down and chalked out an action plan. Then instead of focusing on the priority, the administration brought Iraq into the picture and chose to go after Iraq. Despite other world agencies and leaders claiming no link between Saddam Hussein and WMD or terrorism – the Bush administration chose to do go forward with invading Iraq. The war was a big mess. It spread the US thin across the middle east with no directive. There was no action plan on what to do, how to do and when to withdraw. Senior officers and defense personnel frequently gave advice and initiatives for action, made strategic suggestions which were all ignored. Barely any thought was given to civilian safety and human rights until much later, thus turning the average civilian anti-American.
Meanwhile Osama Bin Laden is still roaming scot free. Taliban has increased its spread and control. Terrorists have deeper infiltrated networks into Pakistan and India too. Things that should be nipped in the bud way back in the day were allowed to grow into bigger issues – while the administration served their own purpose.
Another problem US has is military recruiting and conscription. Being a soldier is one of the most honorable jobs people can have. I've seen in India that there is often a sense of pride and patriotism when it comes to the military. These are men and women who have chosen to put their life at stake for the honor of country. That sense of duty shows. The perspective of military in USA is very poor. Due to excessive conscription in the past, disillusionment of veterans over how the government treats them, policies like Stop Loss etc – there is a very negative attitude to the military. People do not enlist as willingly. The military recruitment tends to target minorities and lower income communities. Many of these choose to enroll simply because they have very few other alternatives in life, find it as a good means to make money or compensate for their minority status. The result is a lot of lost, confused, frustrated, angry youth end up in the military. They do not have the right mind frame or maturity to go into war. What results is civilian harassment, brash actions, things like Abu Gharib and rape, harassment and hazing within the ranks too. Thus further dropping the respect for military and giving way to endless cycles. The military system recruiting, training, chain of command etc need to be revamped. (Note that this is a broad generalization).
The biggest problem I see is the commercialization of war. The involvement of companies like Halliburton and Blackwater (now Xe) has revealed a lot of inefficiencies. There were no proper bid procedures to offer contracts to Halliburton which were excused as 'military operations', Halliburton blatantly overcharged the government and had shady practices and then soldiers could not get proper equipment due to overload on military budget. Dick Cheney clearly received pay offs from Halliburton. Then Blackwater operatives have no loyalty to any country. They are war mercenaries. People who fight for the highest bidder for profit. They have no accountability or responsibility to the US government. There have been several issues with Blackwater and US jurisdiction has been able to do nothing.
How could the war on terror succeed if the administration – ignores the important terrorists and issues, does not listen actively to intelligence or military feedback or act on it, treats soldiers with disregard, uses the war for corrupt money minting practices and deals with enterprises that they have no jurisdiction over.
I think the US military intelligence (not administrative intelligence) and the military in general gets unfair criticism and flak for the shortcomings of the administration. Although many people give Obama flak – I think he is doing the right thing by sending more troops into Afghanistan. I think he has to be more harsh with terrorist groups in Pakistan. I think Hillary and he have been more sterner with Pakistan wishy washiness than with any prior administration. Some people find Obama excessively soft, but unlike the previous administration I think he has a better idea of terrorists, terror harboring nations vs. innocent civilians. He just has to be more assertive over it. It had been seven years of mess ups before the administration changed, it wont be easy to fix. Then global economy crashed and countries were not able to focus on war on terror as much. I hope once economy stabilizes US and other nations can redirect the war on terror to something that is more concrete and with results.