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I didn't think the issue was with private vs. government funding. I was under the assumption that the main issue was with the United States government limiting through the legislation the ability to even work with stem cells by choking off access to stem cell lines.
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My understanding is that the debate does to a certain extent involve funding: Bush is opposed to using federal funds to support any stem cell research that involves destroying an embryo. That seems to be his position. He seems OK with the idea of doing the research in principle, as long as federal funds are not used for the destruction of embryos. He stated in his recent speech that stem cell research on previously destroyed embryos is ethical.
The difficulty is that the 78 U.S. stem cell lines that Bush approved for research (because they were made from previously destroyed embryos) were found to be tainted, so they can't be used. So at present we're at a dead end; embryos need to be destroyed in order to create new stem cell lines, but Bush won't allow federal funds to be used for this purpose. Presumably private funds could be used, but at present there isn't any private support (as far as I know -- anybody know of private sources funding stem cell research?).
Then the House voted to ease restrictions of federal funding, which would allow new stem cell lines to be created. Bush is adamant though and has promised to veto the bill.
And into this mix a Korean lab just demonstrated that stem cells can be created by cloning: you take the DNA out of any somatic cell, take an egg cell and remove its DNA and replace it with the somatic cell DNA, induce it to divide, and it can be made to form a blastocyst. So you've created stem cells in vitro, without creating a zygote by fusion of egg and sperm.
Is this cloned blastocyst a real embryo? Well, if you implant it in a womb, it will develop into a baby. But there was no "conception" involved, its DNA was from a skin cell or bone marrow cell or some other somatic cell, not from a sperm or egg. It has no potential to develop into a human because it's sitting in a test tube. So what is it? Bush hasn't weighed in yet on whether he thinks this is a disposable "embryo" or not.
That's where we stand. Other countries are full speed ahead on this research; we're basically sitting waiting.