There is a libertarian meme going around that the debacle of FEMA and DHS response shows that the government is too big, thus has to be slashed further.
But, it is not the size of the government that matters, no matter what kind of metric you use to measure it. It is what you understand the government to be.
What matters is:
a) purpose - something that FEMA lost under Bush;
b) efficiency - something that FEMA lost under Brownie;
c) relationship between Federal and local governments - it is understandable that Republican Feds and Democratic locals (e.g., LA governor, senator and mayor) mistrusted each other, questioned each other's motives and faught for control;
d) relationship between the government employees and the local citizens:
In NYC on 9/11 local cops, firefighters, EMTs, spontaneously organized citizen's groups and the victims (perhaps due to all being liberal) trusted each other and synchronized activities with each other, resulting in a very efficient response to the disaster.
In NOLA, by contrast, local government employees (e.g., cops, Guard, etc.) and local citizens eyed each other with suspicion (due to past experiences with each other). The cops, many of them white Republican bigots, saw dangerous unwashed masses. The people, at the same time knew not to trust the local cops.
As a result, and unlike in NYC, the spontaneously organized citizen's groups were seen by fearful cops as mobs. As a result, cops thwarted the activities of self-organized citizens, thus making things worse for the victims, as well as making the job more difficult for themselves.
It is the Us-versus-Them libertarain mindset not seeing government as being of, from and by the people, that got a big hit from the aftermath of Katrina. This has nothing to do with SIZE of the government.
Update: More on libertarianism here
Update 2: Wow! I must be brilliant! David Brin wrote about this in almost exactly the same terms, except he has developed it further here and here.
Update 3: Perhaps it is all due to The Lake Wobegon Effect!