To date, apart from Foreign Ministry spokesman Hossam Zaki's phoned-in appearances on CNN and al-Jazeera to explain that a) the protests are being exaggerated by the media and b) they prove that Egypt is democratic, I have not seen any reaction by the Egyptian government to the biggest protests in decades.
The explanation is simple: Mubarak does not want to stoop to responding to these protests.
If you only knew Hosni as I do, you'd know he's terribly stubborn. He likes to dig in his heels. He won't be forced into a decision. He is a like a gamoosa (water buffalo, as common as cows in Egypt) that just won't be moved off a railroad track. This is his strength and weakness: this stubbornness can be determination (in the 1980s and 1990s, against radical Islamists), but it can also be his Achilles' heel, his inability move quickly to grab opportunities.
Hosni Mubarak could have defused this situation a long time ago — made sure it never happened. He could have ensured that parliamentary elections were fairer and freer and allowed some political plurality that did not threaten him. He could have dismissed Interior Minister Habib al-Adly a long time ago and given orders that police had to stop torturing everyone it dealt with. He could have shown flexibility and political deftness, engaging and cajoling those in the legal opposition who could have been relays to channel popular sentiments rather than pathetic has-beens. But Hosni Mubarak has grown used to being the alpha and omega, he is sui generis, his hand cannot be forced.
Well, immovable object, meet unstoppable force.
He will not address the youth that are taking to the streets and risking their lives to make the point that they are sick and tired of his reign. Even if he speaks, it will be to a different audience, and his speeches will not convince. "Je vous ai compris" said Ben Ali in his last speech — mais il n'avait rien compris! Likewise the government, represented by Prime Minister Ahmed Nazif, may announce grand new measures like new social spending and maybe some political concessions. Nazif could even lose his job (perversely more likely than al-Adly). At most, this will only buy a little time.
The complete inability of anyone in the Egyptian government to address these issues is telling of the dysfunction of the state in the late Mubarak era. Ministers cannot take initiative and do anything, because the president is the one who decides. The president cannot decide, his advisors can only cook up something for the ministers to say. Paralysis reigns, because there cannot be a coordinated response in a regime that is fundamentally fragmented, engaged in turf wars, and whose head has been drained of vitality. This is the crisis of governance in today's Egypt: the various parts of the body act independently according to pre-ordained patterns and individual interests, but cannot coordinate.