Overall, I also want smaller government but I think I'm missing your point.

Are you concerned because the stimulus package is creating public jobs instead of private jobs? I believe that was intentional, it is much easier (and faster) to directly create jobs than to wait for a "trickle down" effect. You can help wall street recover with fiscal policy, but you will have a "jobless recovery" for some period of time until the markets actually believe that it's for real. I have no problem with the creation of "youth services jobs" in the short term if it helps drive down unemployment. I guess we could just use more money to "rescue" banks instead, would that create more jobs in the short term?

The reality is that the government only has a few mechanisms to dump cash into the economy.