>One could argue that the X prize helped spawn today's commercial space companies.

That'd be a stretch. The Ansari X Prize led to a bunch of companies pursuing a goal with little commercial value and few designs with orbital aspirations. The winner led to a costly, dead-end design that has still yet to fly again for suborbital tourism, killed four people along the way, and will never service orbit. The rest of the companies are either dead or vaporware.

That said, I'm generally in favor of prize-based challenges to spur development at lower cost, as long as you aren't forced to set a goal that's entirely tangential to what you want out of industry. Newt Gingrich is a notable supporter of the idea, but I'm not aware of any other prominent politicians who support it.