Here it is, I'm warning you: this post is LOOOONG. If you read it though, I would think you may find it at least somewhat useful, even if you may not agree with me.
People, now that you are arguing about this again, please read my two posts. I don't think I said anything that didn't make sense to a person capable of evaluating arguments. Libertarians as they are in the United States (not one of the broader Libertarian categories such as Libertarian socialism or anarchism) are very big on following the Constitution, personal responsibilities, and free markets. They believe the only place where the government should be allowed to regulate/interfere (or whatever you want to call it) is when life, liberty or property are threatened in some manner. In case you haven't noticed, human rights issues are very related to liberty and thus a Libertarian minded government wouldn't stand idly by while people polluted your property, stole your stuff, told you what to do with your property, etc. You definitely wouldn't see a (true) Libertarian government regulating every little aspect of your life.
Libertarians believe in a minimalist government. Economically speaking, that means the absolute lowest taxes possible should be collected, and those taxes should fund only the limited activities that the government actually does need to be in charge of (defense for example). If you read their statement of beliefs or whatever it is called, they don't just talk about limiting regulatory agencies, they are also for the military to be used in a Constitutional way.
By 'Constitutional' they mean that the military should only be used to defend the United States when it is in danger, not being a world policeman and having hundreds of military installations over the world. There are some limited instances in which I can see the US intervening militarily, such as humanitarian missions, but even those situations can become very sticky. In case you hadn't noticed, the United States spends almost 1 trillion dollars a year on the military. I am all for protecting America and combating terrorism, but that amount is more than the next 10 countries combined. Is the risk of a country attacking and causing grave harm to the United States greater than the total risk of the next ten nations combined? Can standard military forces effectively combat terrorism, or are domestic security options more effective and cost feasible?
Check out the federal budget here and tell me if you see some problems:
http://en.wikipedia.org/wiki/2011_United_States_federal_budget
Interest on the US debt is about 6.5% of the federal budget of 3.83 TRILLION, not billion. Pensions are 20.5% of the federal budget. Healthcare is 23.4% of the federal budget. Education spending is a paltry 3.6%! Defense spending beats them all, even healthcare, with a whopping 24.2% of the federal budget. Here is the kicker: "$57.3 billion in protective services such as police, fire, law courts" a measly 1.5% of the federal budget. Research (which is useful)? Only 3.9%. Transportation? 2.7% General government expenses? 0.75% It is quite obvious that the government actually need very LITTLE revenue to provide the most basic of services. A government that spends 3.83 trillion a year (1.27 trillion it doesn't have, a budget deficit) is not needed.
But you say: "Bill, defense spending is at the target level of 4% of GDP, which is considered acceptable." There is no reason that I know of why defense spending is to be pegged to some seemingly arbitrary percentage of GDP. A country should only spend as much money on defense as it needs to. If it truly needs more than 4% of GDP, then go for it. For the United States I think my country could very well protect itself on 2.5% of GDP, or less. Think of what the United States economy would be like if the government was properly limited, with the States being given appropriate Constitutional power. Think what would happen if the US changed foreign policy to a mostly "no alliances" , non-intervention (NOT isolationism, which implies economic isolationism, not good) strategy and cut defense spending down to 4 or 500 billion a year.
Think about if the government reformed social security appropriately. (Side note: when Social Security started I think that only about 5% of the population lived 5 years beyond the withdrawal age. Now? The average life expectancy for a male is 75, and for a female, 80. People are living longer and getting payments longer.) Think of how much money we would save if social security were need based only and was only based on disability, income status, etc. instead of age, which is often arbitrary (some people are perfectly capable of working at age 65, while others are infirm). I think doing this could encourage people to invest in their own retirement more instead of banking on the idea that social security will be enough to retire on (news flash: it isn't). If you're banking on social security being a decent retirement option then you should really look at what kind of returns your would see on an IRA with the same amount of money put in a year (hint: its going to be a fair amount higher).
If you could wean people off of government reliance (allow them to be independent) and have the government provide only essential services I bet you could cut 50% of the budget in the long run. (Note: I do understand that there are those who simply cannot be independent, and need assistance. Libertarians believe it is primarily the duty of private charity to help these people. Personally, I don't think everything is do-able by private charity, but the ideal would be to have them take care of most things.) However, such progress would take many, many years and political gridlock and stubbornness (especially the refusal by any party, Republican or Democrat to seriously consider a change in foreign policy and trimming defense spending) are preventing any noticeable change from occurring. Any budget cuts currently going on are stupidly cutting areas that are actually mostly beneficial, notably education. Instead of trying to reform insolvent social programs and reforming US foreign policy and military spending, everybody seems to be going for education's throat, which if you remember is only 3.6% of the budget. My mother went back to school to teach, got a job, and a couple months before getting tenure status she was fired. Her class had some of the best test scores in the county I believe. Now? she gets paid half of what she used to, working in a completely different field. That is BS.
Addressing the talk about libertarianism amounting to a Somalia-like state: for those saying things like this, you're probably thinking about anarcho-capitalists or libertarian anarchists. These beliefs aren't really the same as the official Libertarian party platform. They are the ones that are saying the private industry could maintain the roads, run the national defense, provide policeman, fireman, all education, etc. I do not agree with them on those things. Education, while not dominated by the government, needs some general standards. Governments need to manage public utilities. Governments need to provide the civil servants. Governments need to take care of roads. Governments need to enforce a competitive market environment in the certain cases where free markets fail (they are very good at allocating capital, etc. but there are still some quirks).