Space-based telescopes are a better avenue. You can achieve much better resolution in practice with a much smaller telescope. There's no atmosphere to block you, and instruments can capture light of any frequency. Cost is the main disadvantage, but delivery of satellites (and maintenance) to space is getting cheaper and cheaper.
All of which is to say that I agree we should be spending more on astronomy. That was your main point, of course. I disagree with the particulars, and think we should be more willing to go to space.