Here's a Snopes rundown: http://www.snopes.com/politics/war/jefferson.asp
Also a Time Magazine article: http://www.time.com/time/magazine/article/0,9171,994562-1,00.html
I'd throw in the usual bit that you can be against the Crusades without being against Christianity (and I can easily throw in half a dozen similar examples) but we likely all know already that it's not all Muslims. We need a better term than "Muslim Extremist" but I don't know one. Perhaps Jyhadist?
I brought it up partly because it well predates anything with Osama bin Laden, and if we want to look back to American/Middle East relations, we should look back as far as possible. Otherwise, it makes it far too easy for someone to just look back a little further and say, "Well, X happened first."
The other aspect is the question of alliances with other countries. Did Jefferson do the right thing? I'm not familiar enough with the Tao to properly give its stance, although it seems unlikely to me that the Tao would voluntarily suggest creating more force to hold a situation in check.
I would consider paying the tribute to be more upon the stance of buying friends rather than making true alliances, especially when the tribute is not given as a voluntary choice and people are being taken as slaves. Given the choices of accepting the status quo or defending against the attacks, I would choose the latter. However, I will accept that there may be another option.
Most likely the balance is between the two extremes of being the world police and submitting to piracy. With government, however, it is exceptionally common to grow only in one direction, building up rapid inertia until the pendulum swing necessitates a substantial swing in the other direction. In this case, it can be argued that we put too much into the military, placing troops all over the planet and, as some would say, sticking our noses where they don't belong. After extensive buildup, the other side of the pendulum would suggest removing the military altogether, which would put us in the situation of being helpless were we to be attacked.
The moderation to this example, if the premises are accepted, would be to shrink the military without removing it altogether.
One hypothesis about how to do this would be to revert to the way things were done before excess overtook moderation. For an airplane security example, one could look at how airplanes handled security before the TSA. When new technology necessitates changes, one might instead look at whose authority handled matters, and allow the authority to revert to them.