Shrinking the .gov is a good idea, but it's just a drop in the bucket. The real drain is on socialized welfare. Not individual welfare mind you, but corporate welfare, nation welfare, industry welfare, community welfare, etc. If the .gov wasn't so busy giving away our tax dollars, they'd have enough left to run the .gov we have 10 times over.
I hear you. A small nearby town just got a grant (federal, I assume) for $50,000 to fix the roof, put in new carpet etc in their police department. According to the newspaper it is a great thing. To me it is bad policy. Towns should pay for their own maintenance.
But still the best way I know to bring about such a change is to cut the appropriate federal agency by 25% or more. They will be scrambling to save their positions and in the process the grant money will dry up.
If we don't prune back federal agencies, they will keep growing. The nation is way too top heavy.