First, much of the country is never going to be capable of having efficient passenger service. There is no way you can make a viable passenger route between Chicago and LA; the distance is just way too large.
Second, passenger and freight rail just doesn't mix. A lot of European countries look at the US rail market and ask themselves "how can we move that much freight by rail?"
Third, nationalized rail has not worked out well in the US. The article here already talks about Conrail (the nationalized corpse of Penn Central) a little. But Amtrak's stewardship of the Northeast Corridor has been abysmal--here is a linear corridor about 500 miles long connecting 4 of the top 11 largest cities in the US, entirely in public hands, with no freight traffic running along it, and yet we still lack a proper 220mph high speed rail with frequent service along the corridor. US commuter rail systems generally suck even harder than that, and again, they are already all publicly owned anyways (and many of them can't even use the excuse that they rely on track owned by other people).
Finally, if you read the article and particularly some of the comments closely, you'll notice that the problem here can be boiled down in simple terms to "cost minimization in one domain creates secondary consequences that have problems elsewhere"--given the size of the US, even a nationalized system is going to have internal business unit divisions that will keep the same underlying problems. The comments give some examples of such intra-service turf wars causing solutions to not work out.
As an addendum, I assume by "entirely created by the US government," you're referring to the land grants to railroads. Well, land grants to western railroads--the eastern half was built out before they started giving out land grants. And the land grants were only given out during a short ~30 year window. I don't have the exact number on me right now, but I think it was about 40% of the US railroad mileage that was awarded land grants. Hell, one of the transcontinental lines received no land grants whatsoever.