SO...a rational person at NASA, if the organization was not at the mercy of Congress for every project, would dedicate ALL of their budget to getting that $10k/kilogram cost down to something affordable.

Quick correction: It's actually down to a price of ~$2k/kilogram with the SpaceX Falcon Heavy. That's still a fair bit of cash, but somewhat reasonable compared to the cost of developing a payload.

Like this one?

Currently, though, the notion that "private sector will solve all!" seems like more of an ideological excuse than an honest assessment of what the U.S. is capable of in space.

Not a lot of people realize this, but -all- DOD launches and all non-Shuttle NASA launches, plus of course all commercial satellite launches, have been on privately-built rockets for quite a few years now. This includes multi-billion dollar satellites critical to national security. It's somewhat nonsensical to have a separate government-designed/operated launcher just for manned US launches, especially when NASA hasn't successfully developed a launch vehicle in the past 30 years (plenty of failures, though).

If there's someone Lou Friedman should be complaining about, it's Senators Nelson and Shelby and their fixation on providing pork to large aerospace contractors in return for bribes, I mean campaign donations.

I would have hoped that someone in his position would be better informed, frankly.

Actually, while the summary doesn't mention this, this is pretty much exactly what Friedman says in his piece:

http://thespacereview.com/article/1947/1

It's worthnoting that the bulk of the mass and cost is in the first stage and its engines. For example, the Falcon 9 first stage has 9 Merlin engines and the upper stage only has one. This is even more extreme with the Falcon Heavy's 27:1 ratio. Reusing just the first stage might not get them a 100x cost reduction, but it should get them most of the way there.

My personal suspicion is that they'd prefer landing on a platform at sea. Blue Origin has a patent on this, though, so I can see why they wouldn't want to put this in their videos.

This requires separate landing systems for each stage of the rocket. This is a lot more added mass. And the worst thing to add to a rocket is more mass. ... At this point, it doesn't seem that chemical rockets will become that more efficient barring major breakthroughs, like much lighter alloys, or totally new chemical reactions for the fuel. Neither of these seem very likely right now, and the second seems to be much less likely.

Actually, the Merlin engines SpaceX has been using have been getting more efficient, with the new engines providing 50% more thrust and a slightly higher ISP than their earlier engines. This extra capability is presumably what allows them to "spend" mass on things like VTVL landing systems and the required excess propellant.

Actually, I'd argue that SpaceX has benefitted much more from NASA's efforts in unmanned exploration and low-cost space technology than it has from the much higher-funded Space Shuttle program. For example, SpaceX has used and improved on technology like the PICA heat shield material (now the PICA-X used on Dragon) and the principles from the Fastrac experimental low-cost engine were used in the first version of SpaceX's Merlin engine. I can't think of a single thing from the Shuttle program that has benefited SpaceX, unless you count it as an example of how -not- to design a reusable spacecraft.

For the curious, SpaceX didn't directly announce the Grasshopper themselves yet, but it was indirectly revealed for them via an FAA Environmental Assessment Report. The report can be read here.

Besides confirming that the Grasshopper rocket meets government requirements for environmental justice, minimal threat to endangered species, etc., there's plenty of interesting details about the rocket itself. Clark Lindsay listed several of these details here.

And yeah, this is most likely a testbed for reusing the first stage of their Falcon 9 rocket, as their initial attempts at reuse haven't panned out so far. It'll also give them valuable experience in creating software and controls systems for automated rocket-powered landing, which will be quite valuable for their eventual planetary landers.