You can’t understand how ISS came to be without understanding the cold war roots of the project.
During the cold war, there were attempts to use the space race as a way to bridge the gap between the U.S. and the USSR. This started with Apollo-Soyuz in the 1970’s - a mission that had no real value other than as a way to get Americans and Soviets talking, working together, and sharing information. The thinking at the time was that by bringing us together in a large joint project, barriers of mistrust could be broken and a new era of cooperation and detente’ would ensue.
Later on, the ISS was a much more sophisticated geopolitical plan. One of the obstactles to disarmament and the peaceful transition of the Soviet Union to a free society was what to do with their massive military economy, all the scientists that built ICBMS and other weapons, etc. ISS became kind of a social works program for Russian engineers. The thinking was that by giving Russia a giant space project to work on, and by guaranteeing a future for Soyuz capsules, Progress rockets, and other Soviet hardware, it would lessen the strain of ending the cold war and help prevent these people from staging a coup, or from selling their skills to bad people like China or North Korea.
ISS became a white elephant because its scientific mission was always compromised by the politics behind the project. And as the geopolitical situation changed, the rationale of ISS kept changing. So funding would be cut, and the station would be re-designed. Then funding would be restored, and it would be re-designed again. Then funding would be cut… It’s a hell of a way to run an engineering project, and the result is the hideously expensive, complex, and less than totally useful ISS we see today.
Luckily, the new NASA sees ISS for the boondoggle that it has become, and has plans to end its involvement with it by 2016, when the last of the international commitments to the station run out. And the major part of NASA’s expenditure to ISS will end in 2010, when the last shuttle flight to it brings the last major component required to complete its construction. As these programs end, money that is flowing into them now will be increasingly diverted to the new space exploration initiatives.
Had NASA not come up with a new space exploration initiative that would soak up the workers and infrastructure left behind by the Shuttle’s retirement, it’s highly likely that rather than the money being diverted into robotic science or other NASA projects, it would have simply been cut from the budget. So the choice really isn’t between having a moon base or having a bunch of new robotic explorers - the choise is between having a moon base or having NASA’s 17 billion dollar budget cut to maybe 9 billion.