Why is it that the government works to compel citizen dependency?

A close friend of mine finds herself in a quandary.  She can barely pay her mortgage, but continues to do so, feeling that it is her obligation under her contract with her bank.  She has spent dozens of hours filling out paperwork to get her loan renegotiated, or even to fix her rate (she has an adjustable rate mortgage) before it starts to float early next year.  She has also looked into the Obama plan available for homeowners in foreclosure, but since she is paying her mortgage, does not qualify.  Ironically, because of the actions of the Fed, interest rates are so low that once her rate adjusts, her mortgage payment will actually be lower by a couple hundred bucks.  Her concern, however, is that interest rates will rise at some point and she will be unable to afford the higher payment.  This anxiety is not unfounded given that the Fed literally printed $600,000,000,000 out of thin air to buy T-bills last week.  At some point, our international creditors (read: China) are going to collect their due, at which point either the dollar will crash or interest rates will necessarily rise, likely substantially.  So, back to her mortgage.  Her only option at this point is to...stop paying her mortgage.  Then she will actually qualify for the Obama mortgage bailout plan since she will go into foreclosure.  Does this seem ridiculous to anyone other than me?  Now some might say that my friend is in a conundrum of her own making and that she should not have signed onto an ARM in the first place.  Pre-2007, though, the real estate market was looking pretty damn good.  Prices were rising regularly, sometimes ludicrously, and I remember hearing from my own mortgage broker "don't worry about it!  You can always refinance it later before the adjustable period ends!"  Hard to ignore that kind of reasoning, at least at the time.  So tens of millions of Americans bought maybe a little more than they could, or took an attractive short term ARM thinking they could just trade out of it later.  Well, no one (the Fed was doing...what?) guessed that the real estate market and the banks holding all the paper would take a shit like they did in 2007-8.  It occurred to me that my friend would likely be able to cover her mortgage easily if she just made more money.  If switching up in a job to make more money were easy, then everyone would do it.  So, how could she possibly get an instant raise?  Well, she happens to be in the 35% federal tax bracket, her state income tax is 5% and combined FICA, Medicare, Medicaid are about another 8%.  That's 48% of her income!  What if her combined tax rate was only half of that, say 24%?  Without getting into too much math, it seems obvious that getting a 24% raise (which would actually be a 50% raise, as she would be taking home 76% of her gross income rather than 52%) would be a stunning improvement.  My friend would be much better off!  Not only would she be able to pay her mortgage easily, but would have more disposable income otherwise, which would presumably be spent primarily on consumer items.  In turn, this would stimulate the economy, as 60% of our GDP is consumer spending.  Now multiply my friend by tens of millions of taxpayers and we have a stimulus plan we can believe in.  On the other hand, government at all levels would obviously have less money to do things and provide services.  The government is bigger than ever right now, employing millions of Americans and comprising just over 20% of GDP.  But exactly what does the government do well?  Medicare spending is out of control yet still reimburses physicians far more poorly than private insurance; Social Security will be insolvent in ten years, having been designed in an era when the average lifespan of Americans was 63 and there were 20 workers for every retiree (average lifespan now is 80 and there are two workers for every retiree); we have a $14,000,000,000,000 national debt which will grow by at least $1tril each year as far as the eye can see, the interest on which is about $300,000,000,000 each year (and that's at the rock-bottom interest rates we have now!  Just wait till we have to raise them to be able to lure buyers of future debt, ie T-bills referenced above...).  As Reagan said "government isn't the solution...it's the problem."  I would submit that people would be better off keeping more of what they earn and relying on themselves to pay their own way.  I guess it was in the 60's when the people in our nation stopped "ask(ing) not what our country can do for you, but what you can do for your country."  It was LBJ's Great Society which suddenly made it a federal priority to make everyone's problems its own business to try to fix, usually by throwing money at them.  It is obvious that the command economy of the Soviet Union did a terrible job guessing about issues of supply and demand, and that the standard of living for your average Soviet citizen was utter shite compared to their capitalist dog nemeses.  But why?  Why can't a group of people get together and make sound decisions about where to direct federal spending, which is taking up a larger and larger share of GDP?  It's too damn complicated!  There are literally trillions of moving parts in our economy.  Three hundred twenty million citizens, hundreds of thousands of corporations, all making multiple self-interested decisions every day that impact the economy.  This is impossible to model or emulate.  Impossible to measure except in the crudest of fashions.  It makes no sense to have the government, which has little accountability anyway, try to push beans around with the level of richness and complexity with which all the moving parts of our economy do.  From this perspective alone, the more degrees of freedom an individual has to contribute to the economy (read: the more money s/he has to spend), the better.  The more of our economy that rests in the hands of the government, the less efficient, the less vibrant, the less intelligent our economy is.