Because we have an elected government. If the government causes somebody a loss, voters, and by extension their representatives, and by extension, the government itself, wants to make them whole. Without allowing lawsuits, the only option is passing individual laws for each possible claim, and also creating a way to adjudicate those claims. We already have courts to handle the exact same kinds of issues between private parties. Congress decided to let it apply to the government too, when appropriate.

Because it is not yet an authoritarian state. Liberal democracies rarely live up to the high-minded ideals that underpin their political system but if the government excludes itself from the rule of law, it is no longer a liberal democracy.