Damn, people are missing the hell out of the point of this whole process. The idea was to launch a new rocket that had never been tested before. When you do that, you add a payload to simulate mission conditions. The odds of the rocket failing were estimated at 50:50 before it went up. Nobody is going to put a meaningful payload on that rocket with those odds.
Moreover, as I understand it, they needed this test flight to work out the bugs to make the next flight more accurate, more able to be precisely guided. So even The E's idea of student projects where the cost of failure is likely to be minimal (although I honestly doubt that you could put anything like the kind of weight they wanted into the rocket made up of meaningful payloads without spending at least in the tens or hundreds of thousands), the chance of them getting where they needed to go is extremely slim. They couldn't even put the car where they wanted. And on top of all that, if the mission failed and the rocket did blow up, the stories would he made worse by the loss of the payload, no matter what it was, but especially if it was a bunch of scientific stuff (student or not).
Musk didn't get hit by a wave of hubris and desire for publicity and choose to send his car up instead of a proper, scientifically meaningful payload. He did it instead of a payload of cinder blocks or sand bags or something. Sure, it was a publicity stunt, but the net outcome, in pretty much every meaningful way I can think of is exactly as it would otherwise have been (given the risk a version of everyone involved) had he not launched a car but instead launched sand bags, except a tonne more people know that it happened.
As far as why tax payers are supporting SpaceX (or any of the other private launch companies), it's because that's what governments should do. Help support innovative, high risk companies in areas where VC is hard to come by. Use taxpayer funds as seed capital and recoup that capital later (either through direct conventional investment or, as in this case, lower launch costs down the line for government satellites). Consider the alternative: The US government gives no money to SpaceX at all (I've heard that they actually supported the Falcon Heavy to the tune of around $1bn). The company continues, on Musk's Paypal money and whatever VC he can attract. It takes, say, five years longer to get to where they are now. In that time, the US government launches three satellites a year at $380 million per launch for $5.7 billion. Had they had these $90 million dollar launches, the cost would be $1.35 billion. Even with the billion dollars of support, it's still cheaper. Even with another three billion dollars of support given to other companies who don't succeed, it's still cheaper.
And that's the key here, why it matters so much: This is all so, so much cheaper than any other system in the history of rocketry, partly thanks to SpaceX's self contained production model, but mostly due to reusability. And reusable tickets are game changers - definitely not simply where NASA and similar agencies were decades ago. There's much more to this than just the power od the rockets, remember.
Don't misunderstand: I'm no capitalist apologist who thinks the private sector is perfect and the public incompetent. Government space programs have done amazing things that could not have been done by the private sector. But what I am is an economic realist. When the numbers stack up - and they do in this case - it would be nonsensical to ignore them.
