This reduces the buying power of the populace, which then reduces the profits of the businesses, who will attempt to remedy this by more downsizing, reducing the general buying power of people even more. Thus we will see a self-perpetuating downward spiral that will lead to economic collapse. Frum and his ilk demonize Big Government, that faceless entity that manipulates our lives for it's own ends. Great, massive, it is the evil empire that looms over us. Conservatives want people to think of government in this light, and in some respects, they are right.
Government is no longer representative of the people, but a self-propagating bureaucracy.
However, they are wrong when it comes to the remedy. Cutting back government will not be half as effective as having a more populist one. The right doesn't understand that the key to effective government is to take part in it. However, the cynicism and corporatist tendencies of politicians breeds voter apathy. Instead of relying on special interest groups and political parties to convey the individual interests, individuals should get up and take part.