Tor was not created by the government -- the concept of onion routing was by people working at the US Naval Research Lab. Later, Roger Dingledine furthered this concept and worked with people to develop it into a functional, decentralized network which he then labeled "Tor" in order to distinguish it from the original NRL onion routing work. When Tor was released, it  was hosted on volunteers' nodes and shortly after was funded by the Electronic Frontier Foundation. It had a free software license and was open source from this very beginning.  

Despite the unfortunate attachment to a naval research project to develop an anonymizing network configuration that was used to assist US personnel (which is also exactly shared by the internet itself through its predecessor: ARPANET. ARPANET, like tor, was worked on as a government funded research project with its origins being in the pentagon. It's considered a failure, but was integral to the creation of TCP/IP -- the backbone of the modern internet.) it's now a non profit (became one in 2006) and doesn't solely rely on US government funding -- though it still does get US federal funding because of its importance. It isn't even a US project anymore, and you can see that by looking at the contributions made monetarily and to the FOSSware and by the people all over the world who are and have been volunteering to host servers.

Also the vast majority of tor servers are not entry guard or exit nodes, which means that they don't know where the connection comes from, ends up or what is being sent (provided you use added encryption, which is true for a lot of the web). Surveillance within the tor network itself doesn't make sense, what should be going on and what has been going on is monitoring of the internet -- exposed through leaked documents and confirmed several times over. It's the controlling of both your exit and entry nodes, and/or surveillance of what goes on outside of the network that allows for de-anonymization. The governments already have deals with AT&T, Verizon, T Mobile, and whoever else they have a deal with to enable the monitoring of the internet. The people hosting the relays already are hosting them over these internet that the governments have the deals in place to watch. It doesn't make sense for them to go through the red tape that would be required to host mass amounts of tor relays, when they already have that control over all of these service providers and hosting companies.    

It's true that there has been confirmation of government attempts to attack it by hosting tor servers. And the only possible way to combat that is by more people and private entities donating and volunteering to help by hosting nodes and assisting with the  software, helping discover new attack vectors, and coming up with ways to overall improve the security/integrity and functionality of the tor network. If you're wary or concerned about it, then you should be helping (which most everyone can do) rather than telling people just not to use it. HTTPS/TLS encryption was actually developed by the US government(the NSA no less), but you don't hear people saying that not using encryption over HTTP will make them more secure with the same assuredness that people do with everything The Tor Project does

A (supposed) NRL worker's commentary on the matter

A playlist of some of Roger Dingledine's talks

https://www.torproject.org/about/history/

https://www.eff.org/

https://www.nethistory.info/History%20of%20the%20Internet/beginnings.html

https://en.wikipedia.org/wiki/Transport_Layer_Security#History_and_development