There are nearly limitless resources in space: precious metals, volitile chemicals, radioactives, water, energy, and so on. There are many useful things that can be made in a zero-g environment, but to mass produce them will require that heavy industry be present in earth orbit. Without infrastructure like asteroid/lunar mines and fuel produciton centers in place, exporation and industrialization will likely be prohibitively expensive for business indefinitely. The time when government will be eclipsed in the realm of space will be when the first orbital dockyards come online, and freight can be easily moved between the moon, near earth asteroids, and orbital factories, refineries, and foundries. Until that time, the only group with the money, power, and clout to drive a space program is the US manned space program.
Certainly NASA isn't perfect; it's research and regulatory sections should be seperated so that they can be made more efficient and accountable. It is overrun by bureaucrats. However, at the present time, NASA is as necessary as the Department of Defense with regards to the future prosperity and safety of our nation. The United States of America is currently the dominant power in space, but that will not be so forever if we waste the advantages we have today.
To play ostrich is to proudly follow in the footsteps of such "great thinkers" as Walter Mondale and Barbra Boxer, who I am sure all FReepers regard with the appropriate amount of warmth. ;oP