The Ideal Size of Government

In his inauguration speech, Obama declared that the issue wasn't whether Government was too big or too small, but whether or not it worked. I interpreted that fairly positively. At the same time, size does matter, at least according to scientific (a term used loosely when applied to economics) study discussed by libertarian Richard Rahn in The Washington Times:

Most of the studies of the optimum size of government made by reputable scholars in recent decades have indicated that total government spending (federal plus state plus local) should be no lower than 17 percent, nor larger than about 30 percent of GDP. In a just completed paper, economists at the Institute for Market Economics in Sofia, Bulgaria, have provided new estimates of the optimum size of government, using standard models, with the latest data from a broader spectrum of countries than had been previously available. Their conclusion is that there is a 95 percent probability that the optimal size of government is less than 25 percent of GDP.

The figures for government spending in the US are between 36-40% of GDP, with the spending bill making its way through Congress representing an additional 5-6% of GDP. And more than the size of government spending, I wonder how much GDP growth in the private sector is restrained due to regulatory hurdles for small business?