Jerry Pournelle is famous as a science fiction author and computer columnist. At least that's what I know him for. However, at Space Access '07 he showed that he says and does a lot of interesting things in the space field, including with prizes.
Jerry discussed a prize idea as "the quickest way to space". He has been pounding the prize message for a long time - maybe since 1980. He discussed the Longitude Prize.
One prize idea would be a $10 Billion prize for a moon colony with 31 people on the moon for 3 years and 1 day, or $5 Billion for 12 people. Jerry had other prize ideas for a space station, suborbital prizes and reusable space vehicle prizes.
The X PRIZE put prizes in the public view, so Congress is aware of the idea. We could use that fact to help prizes. Prizes are the best way, but they are difficult politically, especially in large dollar amounts. They are not impossible. However, the budget is not ready for authorizations without appropriations.
An audience member had a question on Jeff Bezos or similar wealthy individuals interested in space funding prizes. Jerry's answer was that he's tried with the Gates Foundation, but didn't succeed.
I just summarized the aspects of Jerry's talk that pertained to prizes. Please see these links for more on his talk.