Nevermind the author of the link I chose to provide, I chose it because it was rather deailed but wasn't too lengthy.
And yes, friendly fire incidents do happen, but usually once it is known that the attackers are not attacking an enemy but rather an ally/neutral the attackers cease fire and attempt to aid the people they attacked, not send repeated attacks meant to destroy the friendly/neutral target. The Israeli pilots knew they were firing at an American ship, twice they shot up the American flag, even after the crew put up a "holiday flag" I believe it is called, basically an over-sized flag, and again they shot it up. In order to shoot the flag the pilots had to be looking down their gunsights and looking right at the target. Twice Israel tried to board the ship from helicopters, gunboats and torpedo boats repeatedly attacked the ship. The Israeli's knew that they were attacking an American ship. The only reason I have ever heard Israel give for their attack was that they thought they were attacking an Egyptian ship shelling Israeli forces in Sinai.
Which is the American flag and which is the Egyptian flag? They are not that much alike
USS Liberty before attack:
USS Liberty after attack:
Another link
here. It also contains links to several more sites with information on the Israeli attack on the USS Liberty. And yes, this was an actual event that happened and yes, there were cover-ups by Israeli and American government officials to try and ignore this event.