"You can never get rid of low performers, there's no layoffs when priorities change, you just have the same people that need to be shifted around to do a mediocre job elsewhere."

I don't think this is unique to government, these are commonly a characteristic of any organization of large size. The larger the organization the higher likely hood it has these problems. It also isn't a matter of can't but unwillingness to do so by those with the reasonability to because it is extra work or would require an uncomfortable social interaction.