Since bureaucrats lack requisite knowledge and exercise discretionary power over market actors, the recourse to political favoritism is incentivized (there's that word again!) as those market actors lobby furiously to insure that government discretion works to their ultimate advantage. As Milton Friedman once noted, the problem of corporate "greed" is really not a problem exclusive to capitalism, since greed is a universal human characteristic driving all political-economic systems. Capitalism has proven far better at putting self-interest to work for the greater good of society, however, than those other systems, and does it best when decision making is dispersed, spontaneous, and guided by a consistent rule of law rather than directed by the discretion of elites.
Americans like to believe they can move on from their mistakes, but the structural nature of policy networks in Washington virtually insures that government programs, effective or not, will persist and expand. Some of the most far reaching federal policies are not debated in the public eye, but rather take form in obscure subcommittees, regulatory agencies, or federal courtrooms. Targeted lobby groups know their contours well, and fight fiercely to implement, fund, and grow new programs, with the active assistance of congressmen, administrators, and judges. This process is not undemocratic, per se, since these venues are designed to maximize access to environmental, educational, and other interest groups across the spectrum of social concerns.
The narrow economic regulation of the New Deal thus expanded to encompass the "new social regulation" of the 1970s, affecting millions of Americans at home, on the job, or at school. Most Americans support rules for clean air and water (despite their expense and inefficiency). But citizens never really voted for federal affirmative action programs, for example, and when they get the opportunity to do so they usually vote them down. Plenty of bad or ineffective ideas, like bilingual education, took hold within these "issue networks," and getting rid of them is a tough row to hoe.
Of course, conservatives themselves are often seduced to expand the government in this way in matters of education or law enforcement. But the durability and relative insularity of government policy networks explain why Ronald Reagan could never follow through on his tough anti-government rhetoric. Here's one more argument for modesty: once a government program is created, for good or for ill, it's probably not going anywhere any time soon.
Barney Frank made a useful distinction between conservatives and libertarians, noting that many conservatives don't shy away from using state power to moderate or restrict personal behavior. Liberals are far more comfortable with cultural laissez faire than its economic equivalent. Frank's impassioned advocacy on behalf of those Americans who wish to partake freely of on-line poker, gay marriage, and the occasional blunt may fall somewhat short of the Founders' conception of "ordered liberty," but perhaps it is not too far removed from that position to, say, the realization that those same people might just want to invest their retirement money independently in something other than low-yield government securities.