Well, considering my husband's department has been operating with a nearly flat budget since 2000 when he was hired (with little blips up and down never amounting to more than ~10% of total), and a lot of their physical equipment is out of date or worn out, and hiring has been frozen or flat nearly the entire period of time...resulting in an ever increasing workload with fewer employees and with less money to support operations...
DH's department heads have been famous since W took office for their variants on the "tighten our belts" statements. During the W years it was: "well, our funding is keeping up with inflation, but not allowing us to staff up to meet work demands, or do more than basic equipment upkeep and replacement, so please be as efficient as you can, and try to do more with less for a few more years".
Then during the first Obama term, there were 2 years of small increases to try to catch up on the emergency staffing and equipment needs, it was "well, as we all know, the nation is in a recession, and budgets are tight, so this is probably the only funding increase we can expect...let's all buckle down and try to do more with less".
Then during the second Obama term, it FINALLY became, "you know what, it's been more than a decade of us asking you to do more work with fewer people, less resources, less money...at this point our budget is so crunched that we no longer expect you to meet the productivity levels that were a given a few years ago...I guess we're going to have to resign ourselves to doing less with less"
The fact is, discretionary spending on non military and non entitlement programs is a very small amount of the Federal Budget. Theoretically, it is possible that every OTHER discretionary-spending civilian department in the government has been getting dramatic increases in funding the past 17 years, and my husband's has somehow been screwed, but I doubt it. What I suspect is happening is that the creation of the huge new Dept of Homeland Security, war funding, and ever increasing entitlement spending is sucking up all the money and more.
Are there efficiencies still to be found? Hell, yes! DH complains constantly about the incredible amount of valuable time (which = money) sucked up by 'transparency' tracking (mentioned by SailorSam) and mandatory training exercises (safety, sexual harassment in the workplace, etc etc) and various other redundancies, etc.
But I'm skeptical that inefficiency is the real driver of cost of government.
It's also worth keeping in mind that personnel cost is the largest element of discretionary gov't spending (again, keeping in mind that discretionary programs are a relatively small part of the overall budget); but while number of government employees has certainly grown over time, it has shrunk relative to the U.S. population size. So there are fewer and fewer Federal employees/U.S. citizen being served.
One would expect some flattening of that ratio, as efficiency per employee has tended to rise over time in the United States generally, but I doubt it accounts for all of it. As a function of per capita population, the Federal workforce has been gradually shrinking, not growing.
At the same time, Federal taxation is historically low during these same years.
Also, I want to point out that inefficiencies of scale are NOT limited to government. My sister used to work for a huge international hotel chain, and the level of inefficiency, poor performance, and waste she saw on a daily basis provided endless entertaining stories at family gatherings. Large organizations have inefficiencies because people are often inefficient, and large organizations have more people.
Personally, I think the challenge is less 'rooting out inefficiencies' and 'raising revenue' (though I support both), than having the really hard conversations about what Americans expect/want government to do. Because currently, most people appear to want to have a ginormous number of services without paying for them. Or they erroneously think the majority of the federal budget is spent on foreign aid or some such bullshit, rather than their Medicare/Medicaid. And further, people disagree about what the crucial services actually are.
As usual, it's hard to have any meaningful conversation about anything if most of the citizenry is starting from a point of ignorance.