I fail to see how you managed to make a connection to "Ayn Rand-ish libertarianism" and why you think many people in government believe in it. Don't libertarians dislike government?
Libertarians (unlike anarchists) don't "dislike government." They dislike government that has more than a specific set of responsibilities.
That said, I don't get the Rand connection here either. I will say that NSA spying isn't necessarily incompatible with a libertarian government. Libertarians don't reject the law & order or security functions of the state. Even a libertarian government would have the power to issue warrants, subpoenas, etc. Given that, something like the recent NSA incident couldn't have been prevented with a "small libertarian government." It's cheap as hell (Google, etc, do all the work!) and leverages basic powers that would exist in the "smallest" governments.
"I will say that NSA spying isn't necessarily incompatible with a libertarian government."
I would believe it is against the very definition of libertarianism as a belief and not any political party with libertarian in its name. Taken from Wikipedia:
"Libertarianism (Latin: liber, "free")[1] is a set of related political philosophies that uphold liberty as the highest political end.[2][3] This includes emphasis on the primacy of individual liberty,[4][5] political freedom, and voluntary association. It is the antonym to authoritarianism.[6] Libertarians advocate a society with a greatly reduced state or no state at all.[7]"
