Ask any ten people what the biggest problem with the government is, and you'll get ten different answers. Here's my thought, though: the biggest problem with government is that it tries to govern.
Think about it - like any organization, a government has to have a purpose. But unlike a business, there really isn't any way to show that it is accomplishing that purpose - no profits, no IPOs, etc. The things that a government usually is responsible for (at first) are the things you want to keep from happening: wars, disasters, etc. So if there's no war, people can't tell if the government's doing a good job, or just lucky, can they? And so complacency starts to set in, and people start to ask if we really need all that government.
Well, like any organism, government wants to survive. And so it starts looking for more things to do in order to justify existing. And we get trade agreements, then domestic laws, and so on. At each stage, something gets tossed to the citizens to keep them happy (health care, welfare, education programs, ad nauseum), and at the same time the government gets to grow. "Look at all we do", they say, "how could you get by without us? Oh, and we need more of your money."
And so the vicious cycle continues - the government finds more things that only it can do (often by first making it illegal for anyone else to do it), and then proceeds to suck up the resources from the people in order to do it. Never mind that in many cases the issue was handled quite well (and often better) at the local level, with less cost. An organism which does not grow, dies - governments know that as well as any biological entity.
But eventually, there will come a point when the host can no longer support what has become an essentially parasitic organism. Then is the time when nations collapse or reinvigorate themselves. Sadly, both options are painful. And given the inherent tendency of people to avoid pain, that choice will probably be pushed off as far as possible - and in this case procrastination really does make things worse.
The big question is - how bad do we want it to get, before we tell Washington to get it's act together and push government down to the people again, rather than keeping it in the hands of the elite?