Just to offer the perspective of someone who worked at NASA for a bit.
1) Privatization is a great idea for simple/routine stuff. I love Space X, and they're perfect for doing things like fueling the ISS and taking people into orbit, but they're a space transport company, not a space exploration company. Doing something truly revolutionary does take a concerted public effort. If we want to go to Mars in a reasonable time frame then it has to be in some way have major government backing. Similarly a great deal of scientific research is funded by NASA, which again would not be done by a private company. Ultimately some aspect of NASA can be privatized, others can't, it's not a silver bullet.
2) NASA is too politically controlled. Too many programs are dictated by congresspeople who frankly don't know what the fuck they're talking about. Personally I think NASA would be far more effectively, even with they money they have now, if they had full reign over their budget and could actually invest in what should be invested in. A lot of money has been wasted of "cool sounding" programs of limited scientific value that were pushed by well-connected individuals. The reason the Space Race era worked is that the politicians set the finish line, not the route there. Nowadays there's no finish line marked, and politicians force NASA to go in 10 directions at once.
3) What NASA needs more than funding is a vision. As it is now NASA's mostly a grab bag of a bunch of different competing programs and efforts. What we need to collectively decide on is what NASA is supposed to do. Should they focus on scientific-research? Space exploration? Space tourism? Whatever it is we need to pick something, and then our goals should clearly dictate the budget necessary. If we just want to stay in Earth orbit and fuck about in the ISS then a small budget and heavy privatization is fine. If we want to go to Mars then NASA needs a significantly larger budget.
What does the NASA budget for 2013 say to you Bamar?
I'm interested to know as $13bn says to me "we can't terminate NASA (we'd like to); if we trash them too much then JWST is it and we look like luddites". SLS won't ever happen and MPVC will end up a capable vehicle with no launcher or purpose. That's NASAs current future from my perspective. Edit - I have an interest from the ESA side of things, although I haven't worked for ESA companies for a while.
tl;dr if its not military (and has an application within 10 years) then we don't want to know seems to be US govt policy.