Once the outbreak got too crazy the military took over the government (they talk about this in the intro video between prologue to current day). You will learn more about specific quarantine zones as you play so I wont go into anything further on that front. But from walking around the Boston quarantine zone you learn that they are running out of food, running out of people to work/guard, and they aren't letting any new people in to the zone. I wont say anything further because the game does a decent job painting the rest of your question as you play. Specially if you explore the different areas and listen to the optional dialogue.
The Fireflies agenda that you know at this point in the game is from the opening movie, they want the original government restored and want to abolish the military rule.
In case you want a refresher here is the video I am talking about (about 1 minute long) and it plays right after the prologue section of the game.
https://www.youtube.com/watch?v=rnp4-RoRxSo
It does a great job answering most of your questions.