The Final Frontier... of Privatization?

To take a break from the more critical articles I've posted, here's something a bit less controversial: the future of NASA. Obama has recently called for the end of several key features of the government-run space program, to save money, while calling for that money (and more) to instead go to private corporations willing to do the same jobs. The proposal assigns operations in low-earth orbit (LEO) to the private sector, while using NASA trained astronauts for the actual mission content. NASA will instead focus on the long-term goal of either returning to the moon or going to Mars.

I suppose many would question the use of government funding for space exploration in the first place, given the variety of other needs here on Earth. I fear I might be among these doubters, despite my strong belief in the necessity of space exploration. Unfortunately, this necessity is not quite as necessary as the elimination of poverty and the providing of proper education.

But perhaps more interesting to talk about than the mere feasibility of a government-run space program is whether the out-sourcing of these jobs to private corporations makes economic sense. I believe not, because space yet lacks that which we have found drives all private business: profit. Space travel is set to remain prohibitively expensive in the near future, putting a great damper on any real tourism. Though the presence of valuable resources has been theorized (Helium3 on the Moon, metals in the asteroid belt), these remain out of reach even for the most heavily-financed enterprise. As such, these private space companies will be forced to live off the occasional fancy of the mega-rich, as well as the government dole.

Any thoughts?