Nothing will happen from it. Your connection is always surveyed anyway in case you didn't know...
1. I've already explained why something will happen from it
2. Yes, it is, but there's always been ways to make sure something is private by means of encryption. Using HTTPS, encrypted proxies and file sharing, stuff like that. What they're proposing is that they should have a way to see through the encryption, which would not only blast open the doors for abuse NOT ONLY BY GOVERNMENT, but by hackers as well.