Yes they can. The govnt / lawmakers can issue an order not to spend from a address. If it moves you are arrested. Thats it. Bitcoin CAN be censored. And it HAS been.
Then the theory of contrarian governments arise. Never in the History of Humanity, all governments have been fighting the same idea as once, China banned mining. Then mining relocated to USA. If USA censors transactions, then pools (not the same as miners) will relocate to another territory (El Salvador, maybe?) and USA miners would get rewards from non-USA pools. Can America government avoid it? No.