Seriously though.... The first Kinect could have done the same thing, as can all the webcams that people have plugged into their computers. But for some reason people think this thing was seriously designed to control your every move, lol.
The government could tap your phone, tap into your smartphone and watch you through it's camera, watch you from the clouds via a drone, and many other much more resourceful ways than from viewing through your Kinect, if for some strange, idiosyncratic reason your life is actually that interesting that your government wants to watch your every move..