So basically researchers can either choose to have the materials to do the job, or the money to do the job, but not both. Most researchers opt for the money and do what they can.

I'm surprised there aren't a significant number of private billionaire philanthropists who have stepped up to fill this void. In fact, I think there may be. I think the founders of Google or Google.org have. I'm not sure if some of the more high profile philanthropists like Bill Gates or Warren Buffett have through their organizations, but quite possibly.

Granted, lots more progress could be made if there wasn't a backwards government prohibition on this kind of research, and the government reasearch funding spigot was wide-open, but it's not like real stem-cell research isn't still happening.

I think the situation regarding stem-cell research might change once the US administration changes in 2009, but we'll see. It'll depend on who gets elected. Either way, there will still be a bunch of politicians pandering to the unwashed (and educationally stunted) masses, but hopefully things will loosen up at least a little bit.

If we lived in some alternate universe where for some reason stem-cell discoveries could only benefit elected politicians, you can bet your ass it would be funded as well or better than the defense department :)