Counter point: the more the government gets into funding OSS, they will essentially become a competitor to other software companies. Now the government both has the power and incentive to hinder private companies with rules and regulations.

I think that if the government needs OSS software for actual use by the government, then that's fine. Don't make the government become a competitor to private industry. Look how that turned out with Uber vs. Taxis.

OSS is just like anything in the free market. If people and companies want it that much, they will spend time and energy on it.