The government has very specific duties. Provide health care, education, law enforcement, maintenance of infrastructure, and basic defense. However, I would like to see a ton of laws go down the drain. The fewer laws, the fewer criminals, the less it costs to keep order.
Legalization of drugs would provide a TON of tax revenue at all levels of government (I would support a heavy sin tax on the hard drugs like coke and meth), create a lot of small business, and allow the FDA to put quality controls on drugs to prevent things like coke from being cut with borax or whatever. Also, DUI fines/penalties would be increased (let's say quadrupled). Hit a man in his wallet, and he'll behave.
Legalization of prostitution would be another tax source, with careful requirements for the protection of the workers. Regular STD tests paid for by the brothel, mandatory condom use, and protection for the workers in the event of a violent client. Pimping would be illegal.
Also, we're really, really doing it wrong when we're dealing with terrorists. Proven methods are being ignored and all we're doing is proving them right. I'm sure you're already aware of this.
Intellectual property has it's place but the current system is fucked up. Creative commons is a step in the right direction, but publishers' rights should be limited when it comes to keeping something under copyright. Heirs can request that something remain under their control, but only for two or three generations. None of this crap we saw with Amazon and 1984.
The government has almost no right to limit communication of any kind. If it's not exploitative or a state secret (of which there should be precious few), then it needs to keep its sticky fingers to itself. Also, transparency is of incredible importance. The Freedom of Information act should be amended to speed up the process it takes to get information to those who request it.
If you can't work (like a late friend of mine) and you therefore don't pay much in taxes, you still get your benefits provided you keep treating your illness. If you stop, you get kicked off everything but the very, very basic plan (ie, you go back to the doctor six months from now, you can get back on that plan).
Preventative medical care is encouraged.
Bureaucrats take a doctor's advice into consideration when dealing with your medical coverage. I don't see why it has to work any different than a private insurer at all, actually, and perhaps we can improve their system. If nothing else, hire more people. More jobs, better economy.