There are a couple of things at play here. We can start with sheer population growth. To have a larger population without a larger government would be an interesting trick that I would like to see performed on some other group that wanted it. We can observe and see how that works out for them. But human nature has me not wanting to participate in the experiment.
Another concern is the same issue that I see with Athena: A continued focus on government itself, while giving a pass to the actors who have purchased the government; and who have it do it's bidding, run interference for them, and keep the population off balance so they can continue their idea of what constitutes "government". Some times that includes tossing a bone or some bread and circuses, but the the real goal is to walk that tight rope between keeping the cow alive and producing, right at the margin of bovine health. This results in virtually all of the problems you mention in the back-and-forth of government getting torn between caring for the cow and keeping the farmer from killing it. Meanwhile, the farmer just wants to make sure the cow doesn't kill him.
To the extent the U.S. government has always been a good faith actor, it is due to the few remaining glimmers of democracy that twinkle under the ever-growing cover of Plutocratic darkness. That darkness does not want community any more than a conservative wants their child to return from college with enlightenment. Produce, consume, shut up. Community is getting together to rail against government. That is the kind of community the Plutocrats support.
[Side bar: Did Venezuela fail because democratic socialism is inherently flawed? Or did it fail because external bad actors were ostracizing it on the outside and fucking with it on the inside? (Agent provocateurs, CIA BS, etc.) I think the latter. And those same tactics are used here at home.]
As far is privacy is concerned, I like to draw on an old health care example: I absolutely supported the confidentiality of me and my family's personal medical information . . . when I thought the health insurance industry was going to use it against me or mine. But once pre-existing conditions were met, caps were removed, and conditions covered, I supported the widespread dissemination of my private medical information to every freaking nurse and doctor on the planet. I'm always surprised out how there is no centralized data base somewhere that a doctor in Timbukto could pull up and consult if I get hauled in for treatment. I'm always surprised that I have to remember what happened to me 30 years ago, or what my ancestors experienced in the way of cancer or whatever.
My point here is, the only people who give a shit about your personal information are those who can or would use it against you. That is only government when government is controlled by money and not people. We, as individuals, just aren't that important for government to spy upon us unless government is controlled by bad actors. That is an absence of community right there. Community helps people. And community also recognizes the desire of someone to be left alone if they want. But being left alone might entail a limitation on access to community resources. Don't want to pay taxes? Fine, but stay off the roads the community built, etc.
I have a friend who works for FINCEN. They track every transaction of $10k. This is designed to track money laundering, drug and human trafficking, etc. In other words, it is designed to neuter cartel activity. Cartels are the other side of the Plutocratic coin:
both leave the other alone to their shenanigans (caveat below) while maintaining government to do their dirty work and serve as a punching bag or foil. Both will cause government to fail in this or that provision of services, then provide that service and endear themselves to the "community". Anyway, I digress. What I'm getting at is, I don't know why the IRS is planning to snoop on yet even smaller transactions, but it will only be for nefarious reasons if government itself is working for Plutocrats or cartels. When the tug of war gets too close to the margins, then the Plutocracy will use government to pursue the the cartels. But those cartels are just wannabe Plutocrats so they have their own struggles.
The point being, if people want small government they should work toward a small population. If they want responsive government, they need to wrest control back to themselves.