NASA, Raytheon, etc did employ these same engineers, and had access to much thicker wads of cash. They did not produce a returnable, reusable rocket, though. They've produced the Space Shuttle.

With technology that is now about 40 years old. With the benefit of hindsight, the shuttle probably wasn't the ideal design--if only because it wasn't reusable as the designers hoped--but I think it's fair to say that the "right" design wouldn't be what can be built with a clean sheet of paper today.

(Arguably, existing heavy launch vehicles should just have been upgraded for man rating given that ULA's launch vehicles are pretty reliable today. But I'm not enough of an expert to know what the best alternatives to the Shuttle would have been.)

Yeah, it's not clear if a self-landing retrobooster would have been possible given the components available at the time of the space shuttle's design, not to mention the vast improvements in computer modeling and simulation that we're available to SpaceX.

But, of course, that's only part of the story. The space shuttle had additional political constraints, i.e. spreading the wealth to many congressional districts, that greatly increased the cost and complexity.

The Shuttle also had bonkers flight profile requirements (polar launch from Vandenburg and an immediate landing) from the Air Force that severely impacted its affordability.

As well as questionable payload requirements such as carrying the Centaur upper stage...

It may have been a rather silly idea but it wasn't on the same level of impracticality as the Air Force's "launch into a polar orbit, capture a satellite, and land in one orbit" requirement. The first Shuttle-Centaur launch was scheduled for only a few months after the Challenger disaster occurred, so it was at least something that would have been used. On the other hand, the Air Force never even finished building a Shuttle launch complex at Vandenberg, let alone use the once-around capabilities.

I thought the cross range requirement came from the necessity of "Abort Once Around" in polar launches.

More deeply, the Air Force was blamed for adding requirements to the Shuttle, when the real problem was the Shuttle had such tenuous economic justification that it needed to pretend it had as many customers as it could. Never mind that much of the projected manifest (and projected flight rate) was an outright lie that the knew was BS as they were saying it.

This part was NASA's fault when it cancelled the heavy launcher program. The Shuttle was supposed to just be a way to ferry people into orbit. Heavy hauling was supposed to be done with a different rocket. Cancelling the heavy hauler put all of the burden on the Shuttle and forced it to be a jack of all trades. Ironically in the name of cost savings they made the most expensive system possible.

I doubt a better design could have been come up with even if they had a copy of kerbal space program back in the day.

Minimum Cost Design expendable boosters would have been far better than the Shuttle. And they could have been designed in the 1960s, when Arthur Schnitt came out with the idea.

One can view the (expendable) F9 as an implementation of MCD.

https://en.wikipedia.org/wiki/Big_dumb_booster

The second paragraph is the point I was trying to make.

Thank you for explicating it.

I don't reproach Shuttle designers. I just try to point at their different incentives. SpaceX has rather different goals than Raytheon or NASA, afaict. This is natural.

If you are given such an opportunity, will you make a cheap rocket or an expensive rocket?

Depends on your goals.

I suppose Shuttle's goals were heavily skewed by the military. It was a much more reasonable project in the beginning.

I agree, they achieved a lot and they stood on the shoulders of giants. The point is that they proved it is possible to achieve these things now. Other companies are emulating what they do and are also getting results. I'm not trivializing their achievements at all.