I don't want to be a dick here, since we are clearly on the same side of most of this. However, you can't really call a decrease in government employment an increase because the private sector lost more jobs. That is faulty logic. In addition, during the sort of recession we've been through, you WANT to spend more government dollars to promote demand. The fact that government spending has gone down for the last 4 years (as a percent of GDP) is due to misguided nonsense like saying that government employment and private employment are a zero sum game. Not even close to being true.
I am really just pointing out that government is already pretty efficient. You claim to work in an agency that is really efficient, but you say that it isn't as efficient as any business. You probably haven't worked in business much. I've worked in various large, successful computer companies over the years (cisco and apple spring to mind. Cisco in particular is 'known' for being cheap), and they are all incredibly inefficient, starting projects and then canning them, buying lots of crap they don't need when they are having a good year, running parallel development efforts, and laying off whole teams they will just need to rebuild in a year. Other things include buying shit nobody needs because "if you don't use up your budget, they will cut it next year". At cisco, there are about 20 labs, each of which have thousands of routers for 'testing and development'. In my racks, at least 80% of the machines were powered on and unused most of the time. This was true of most of the other racks. The power waste must have been 10s of millions of dollars per year, with equivalent air conditioning costs. Nobody cared.
I get what you are saying about government, and not wanting it to be efficient, but that is wrong. Government is obviously not a business (which is why business guys like Bush and Cheney don't really understand it;) it has different goals. However, given a mandate and resources, it should effectively fulfill that mandate using the least amount of resources possible. Serving the most people with the given resources is a matter of pride for many in government (state government, and I suspect federal government.)
The post office won't ever make a profit, but, as you say, that isn't its purpose.