More people and more powerful companies means more abuses of power, which we solve (or try to solve) with regulations. And deregulation is often a simple power grab by unscrupulous companies with the help of crony politicians.
These aren't universal truths, but I think it does start to explain why regulations expand more than they contract.
Contrast that with private business which is forced to adapt to change. They always strive to increase productivity by increasing value while decreasing costs. The exact opposite incentive exists in the government.
I do have a solution to this conundrum - I think we should give leaders a bonus that is a percentage of savings. For example, if an agency has $200 million budget, give the director 10% of all money saved every year. So if they successfully shrink their budget by $10 million, give them a $1 million bonus.
But as it exists today there is no amount of budget that can satisfy the needs of the state.
Wouldn't that just incentivize individuals to gut their agencies for personal profit? The day after a rule like that was put in place, the FDA would stop regulating every drug just so the director would get a $30m payout.
Also, with inflation (especially high as it is now), why would we ever expect an agency's budget to shrink a meaningful amount? Surely we would expect an 8% increase in every agency's budget just to maintain the status quo.