Hey, I am fine with industry standing on its own and living or dying by the free market, but since when was letting the government own your liabilities part of the free market vision?
They're just asking for the same deal the insurance industry, defense industry, agriculture, pharmaceutical and banking industries already enjoy. Who paid the tab for the last recession? That would be the government, as in we the people. Who paid to rebuild New Orleans after Katrina or Florida after the last set of hurricanes? It was partly the insurance industry, which threatened to claim bankruptcy if the government didn't pick up most of the tab. Who pays for bad weather that wipes out crops? And who pays when someone loses their job and can't make their mortgage payment? Who paid for broadband infrastructure and then gave it away to telecos to sell at a profit which then started to whine like bitches when it came time for upgrades?
I actually agree that the government shouldn't be on the hook for any of that, at least not indefinitely. The government might have to be the buck of last resort for the private space industry until the risks are understood and private insurance has a structure for coverage. But then there's an accident and the insurance companies threaten to file bankruptcy if they have to shoulder the full burden of the claim and most re-insurers are located offshore, so they're not worried about paying up to the limit of coverage and saying, C' ya!
If the government doesn't shoulder the burden of liability then the private space industry never gets off the ground. On the other hand, we the people deserve some payback if we're providing insurance.