Wrong on both counts. Plenty of problems come from the private enterprise side of the equation, and it's perfectly possible to have a heavily-regulated economy that doesn't devolve to a police state.
Look at the Netherlands. They're way closer to social democracy than the United States, and are also way more liberal on social issues like gay marriage, drug use, prostitution, etc.
libertarians are okay with all that.
THAT'S THE POINT, genius.
The Netherlands has a big, scary welfare state and massive government regulation of their healthcare system, but that hasn't affected freedom. Hell, look at Europe in general. The social democratic parties and states are the ones who support the most social and cultural freedoms, and are against expanding police state powers.
And how exactly do you make sure they are focused on your issues? Who gets to decide the important issues?
By lobbying, caucusing, and voting based on those issues.
Look, there is no toggle switch between Jeffersonian Utopia and Taxachussets Police State. It's possible for the government to assume a variety of roles in different parts of society.
The big government stuff that scares/pisses off people like me (though I won't presume to speak for anyone else in the thread) are the assertions by the executive branch that
it has some blanket authority to do X without being checked by the other two branches.
It's different to have Congress pass a law that clearly delineates the government's role in a matter, sets up a transparent process for its dealings with citizens/corporations/institutions, and that doesn't violate the restrictions established in the Constitution or other laws. That's how the process is meant to work.
So if we want, say, a bill that reduces CO2 emissions, then we lobby for a bill that sets up rules in order to do just that. It's not like they're on Congress saying "In order to have the power to limit pollution, we need to pass this Government Does Anything It Wants bill, then use that discretionary power to clamp down." Then suddenly OMG jack-booted thugs.
Short version: The expansion of government involvement in one area DOES NOT automatically equal government involvement in all other areas.