The US military spent millions all through the 1960's upto the late 1980's for a successful VTOL aircraft. Along came the brits with fractions of the budget with a great product the Harrier GR-1.
There are some great arguments here, specially the savings in weight from Oxygen by pja.
But I want to ask something different. Even if there is a slight chance for this idea to succeed shouldn't we/they invest in it anyway? Making breakthroughs in jet engine design takes years and extraordinary amount of effort and money. If the government doesn't take the risk, long term innovation would be very difficult. Plus even if it doesn't reach its intended goals many side technologies are generated even from a failed undertaking...