[gargantian]

Great idea in theory, but as you fear I think this would quickly be bastardized into more private military-industrial complex funding.

I would expect a tax-funded OpenSSL to be developed mostly in secret, in cooperation with the NSA, to be extremely expensive to develop/maintain, and to most definitely have backdoors.

[motters]

Yes, I think you're right. It is probably better for most public software to be independently produced, outside of the context of companies or governments.

Another way to tackle the problem might be to ensure that people who want to make public software have the time to do so, because that's usually the main limiting factor with any sort of volunteering.