And it will immediately, although not fatally, impact land line telephones, which I believe do significant backhaul over IP.
The economic devastation would be huge. Banks could not process payments, utilities could not be managed in some areas, software companies would basically lose all productivity.
Heck even many hospitals would be unable to access medical records.
There would be serious wide spread repercussions that would leave a lasting impact on, if nothing else, our economy.
http://www.bloomberg.com/news/2013-05-07/chinese-cyber-spyin...
http://en.wikipedia.org/wiki/Logic_bomb
and of course:
Furthermore, if the government has already screwed up their systems and made them publicly available in the first place, how can you be so sure they'll competently implement their surveillance systems?
Watching funny cats on YouTube isn't so important that I should give up my privacy. Some mega-corp's website going down for a day or two is less worrisome to me than knowing the government is watching me.