I think that when government spending is at lower, "normal" levels then an additional dollar of government spending will cause overall private spending to decrease very little, if anything at all. However as government spending increases to a high percentage of GDP (including spending on interest on debt) then an additional dollar of government spending will cause private spending to decrease by similar amounts (or potentially more then a dollar if government spending is high enough).
Apart from the quantum of spending, we should also look at where the money is going in. If it is just being spent to maintain a bloated bureaucracy and fund some pet projects, then it is effectively going down the drain. On the other hand, if it is being channelled into productive investments, it would have a multiplier effect.
The "multiplier effect" is part of the Keynesian theory of economics and is followed by many liberals. No matter how the government spends each additional dollar it will always create less then one additional dollar in economic output. (The Keynesians actually do not believe that government money needs to be channeled into productive investments).
Additionally if your statement was somehow true (it isn't) the government is still not able to put money to good use in efficient manner, the private sector is much better at this.