In this week’s issue of The Space Review Gregory Anderson has a short interview with former House Speaker (and potential 2008 presidential candidate) Newt Gingrich. Gingrich, as most readers know, has had a long interest in space, which is still the case in the interview, and has been a proponent of more activity by the private sector in space. Indeed, he is not terribly fond of NASA:
I am for a dramatic increase in our efforts to reach out into space, but I am for doing virtually all of it outside of NASA through prizes and tax incentives. NASA is an aging, unimaginative, bureaucracy committed to over-engineering and risk-avoidance which is actually diverting resources from the achievements we need and stifling the entrepreneurial and risk-taking spirit necessary to lead in space exploration.
Elsewhere in the interview, he advocates tax credits to provide incentives for space manufacturing and space transportation endeavors, as well as “very large prizes” for various projects: “If you had priced the space station as a purely private achievement and paid for it only upon completion you could probably have had three or four companies building systems in one-third to one-fifth of the time for the same total amount of money or less.”
Prizes are a much better idea than tax credits, for two reasons. First, tax credits can be awarded just for trying, whether or not the company that receives them succeeds at anything. Second, the tax system is already incredibly complicated. There is already a nearly complete breakdown in discipline to keep any aspect of it simple. Recent tax cuts have come with a mentality of rebates, fine print, and phase-ins. The last thing that our tax policy needs is more targeted tax credits.
Newt and his republican brethren want to privatize everything just like they did with FEMA and Halliburton in Iraq. NASA has been doing a great job with these robotic missions NASA is not broken we don’t need some freaking tax credit that wont do a dam thing these corporations get so many tax breaks all ready. Don’t get me wrong I love Space ship one but Paul Allen has enough money he doesn’t need a tax break. I love Paul Allen go Seahawks.
Greg,
I don’t think you’re correct in your assessment of tax credits. First, adding the wart of a space tax break to the 300 ton swamp troll of our tax system will likely not have any significant negative effect on the code’s complexity. Of course, I’m all in favor of killing our tax code a starting over with a good deal more sanity. I do tend to think such a tax break would do more good than harm.
To your more significant point, prizes would theoretically allow the government to acquire capabilities more cheaply. However, the tax breaks are designed for a different purpose. The tax breaks are meant to decrease the up front risk barriers for new companies to compete. I think the US has significant interest in building the industrial base, and tax breaks like “zero-g, zero tax” have considerable merit. The prize takes risk from government and places it squarely on the companies (you lose, no money!). The problem with that is, companies can quit (never form, move to making toasters, etc..) the space business while government cannot. Therefore, I think it is in the government’s interest to offer tax incentives to get firms “in the game.”
That said, I think a two pronged attack would be best. Offer tax breaks to all who compete, and offer many contracts through prizes. That way we induce alot of people to compete as well as capping the government’s cost by stating up front how much we’ll pay for a given capability.
BTW, NSA, I can certainly tell why the NSA has an interest in you. I don’t think it has anything to do with your politics (vapidly partisan as they are) but more likely your disjointed reasoning chain. Stream of consciousness was an interesting side not in high school english, but doesn’t do well in rational conversation.
Neither prizes and tax credits are perfect as a solution. They both have their “plusses” and “minuses”, but as whole would be very “good things to do”. They are also not mutually exclusive — you can do both.
Also, “zero g, zero tax” is not a tax credit, it is a tax holiday. They are much different things. Tax holidays also have their pluses & minuses also. It too would be a very good thing to do.
None of these individually are a panacea. IMO, the best approach would be a combination of all 3.
But we would need somebody, with the vision & passion for space of a Newt Gingrich or a Dana Rohrabacher, to become President for this to happen. This is not likely to happen.
– Al
PS — A heavily financed package of all 3 incentives (tax holiday, tax credits, prizes) would almost certainly not cost anywhere near $100 Billion, which is the estimated life cycle cost of NASA’s space station when you use full cost accounting (NOTE: full cost accounting means adding in the cost of all the NASA personnel, infrastucture and Shuttle launch costs) of the station.
Neither prizes and tax credits are perfect as a solution. They both have their “plusses” and “minuses”, but as whole would be very “good things to do”. They are also not mutually exclusive — you can do both.
Also, “zero g, zero tax” is not a tax credit, it is a tax holiday. They are much different things. Tax holidays also have their pluses & minuses also. It too would be a very good thing to do.
None of these individually are a panacea. IMO, the best approach would be a combination of all 3.
But we would need somebody, with the vision & passion for space of a Newt Gingrich or a Dana Rohrabacher, to become President for this to happen. This is not likely to happen.
– Al
PS — A heavily financed package of all 3 incentives (tax holiday, tax credits, prizes) would almost certainly not cost anywhere near $100 Billion, which is the estimated life cycle cost of NASA’s space station when you use full cost accounting (NOTE: full cost accounting means adding in the cost of all the NASA personnel, infrastucture and Shuttle launch costs) of the station.
While I’m second to none in my admiration for Newt as an original thinker, I think he’s just a little off base in suggesting that most of what NASA does should be replaced by prizes and tax incentives. For one thing, that’s as politically plausible as abolishing cabinet departments (even the really dumb ones that need abolishing.) Second, there is a place for an agency that does cutting edge exploration and research that the private sector is just not ready for.
Nevertheless, I like prizes and agree that they ought to be increased. And certainly tax incentives like Zero Gravity, Zero Taxes hav etheir uses. But these work as a compliment rather than replacement to what NASA can do.
“BTW, NSA, I can certainly tell why the NSA has an interest in you. I don’t think it has anything to do with your politics (vapidly partisan as they are) but more likely your disjointed reasoning chain. Stream of consciousness was an interesting side not in high school english, but doesn’t do well in rational conversation.”
BTW, just because I disagree with you don’t mean you need to personally attack me. Look I don’t think we should give tax breaks to corporations they will make money of the stuff they develop. I would be in favor of the government and corporations working together. We the People don’t need to give them welfare. Corporations develop things for profit so we don’t need to aid them but when our interest merge we should help them along when it not only helps the corporation and but when it helps NASA complete its missions or benefits the American people. We do not need to hand out money.
> Also, “zero g, zero tax” is not a tax credit, it is a tax holiday.
It’s both. Go to /thomas.loc.gov and read the bill (HR 1024).
> For one thing, that’s as politically plausible as abolishing cabinet departments
You mean like the Department of the Navy or the Post Office Department?
Cabinet Departments have been abolished before.
You also thought it was implausible that Tom Delay would not remain Speaker of the House.
And you find it implausible that humans could go to the Moon affordably, without a $100 billion Apollo on Steroids.
Based on your track record, anything you declare “implausible” will probably happen very soon.
> certainly tax incentives like Zero Gravity, Zero Taxes hav etheir uses. But these
> work as a compliment rather than replacement to what NASA can do.
In some imaginary world, where the government has infinite resources to spend on space.
In the real world, however, NASA squeezes all the other animals out of the trough.
> I don’t think we should give tax breaks to corporations they will make money of the stuff they develop.
Government doesn’t “give” tax breaks to corporations.
Corporations *earn* money by generating products and services that are of value to others.
Tax breaks merely allow private citizens to keep a fraction of the money they have already earned.
Allowing Robert Bigelow to keep some of his own money and use it to build a space station is not welfare.
Welfare is when the government takes Robert Bigelow’s money away from him and sends it to JSC to “preserve Shuttle jobs.”
Brent: First, adding the wart of a space tax break to the 300 ton swamp troll of our tax system will likely not have any significant negative effect on the code’s complexity.
That has been the rationalization every time. Either you want a simple tax code or you don’t. The idea of just scrapping the whole thing and starting over is a fantasy. You simplify one step at a time, or when you can’t do that, you hold the line.
The tax breaks are meant to decrease the up front risk barriers for new companies to compete.
But that risk is there for a reason. Space access shouldn’t be heads we win, tails the taxpayers lose.
Tax credits are just a slightly less expensive subsidy – but they are still every bit as destructive to the given industry. Such subsidies force designs off the drawing board before they have reached the required level of innovation, wasting huge amounts of money and distorting the market such that a sound economically viable design is never found. Subsidies are nothing more than pork and destroy the economical future of an industry.
In contrast prizes progressively pay directly for economic design solutions to given problems. They ensure that designs only progress to the commercialisation phase when they are ready, thereby avoiding a waste of money on an industrial scale. If they are not ready, then another prize round is required to get to the next innovation level. Unfortunately pork buys more votes than R&D, and so is the path of least resistance.
Of course prizes must be directed at creating an industry, not just a one off stunt. This requires open competition between a number of competitors – competition is just as essential in R&D as it is in the market place. This means at least a first, second and third place prize, it also means multiple laps before the finish line, multiple laps also help kick start the market.
An example of such a prize would be a race to complete fifty separate manned orbital flights. This should hopefully be a real race, and might only cost a $100 million or so. The very act of just completing such a race pretty much demonstrates independent economic viability.
Newt Gingrich is correct regarding bureaucracy, but he and Congress promote bureaucracy. He in incorrect regarding over-engineering. The space shuttle is under-engineered. NASA is under-engineered. Because it is under-engineered, it is over-inspected.
In Apollo, the Engineers and scientists laid down the path, and Congress played politics and districting around that path. Today, Congress lays down the path, and there are only Bureaucrats to walk the path. Bad joke perhaps, but the Van Braun German engineers are gone and there are no engineers left to Gerry-rig a vehicle to go down the new path.
And risk avoidance at NASA? Anyone recall Chancellor Sean O’Keefe wanting to return to flight by December 2003? If NASA had had their way, they would have launched a shuttle within a few months of the Columbia loss.
It is Congress, not NASA, that stops the show and is risk avasive. But that is a good thing, because NASA as an agency seems to have no moral conscious. Bad analogy, but the prisons do not decide the number of executions; the courts do. NASA does not take the risk – Congress does, and when it comes to NASA, Congress is pretty conservative. NASA does not understand risk management, nor how to deal with its customer.
The shuttle is proof that NASA is not risk adverse, if they were they would have ensured that they did develop a genuinely high flight rate high reliability system – they did not. The failure of NASA is far more fundamental than this and across the board.
As I’ve discussed before, regarding spaceflight, Mr. Gingrich lost all creditibility for me when, as the leader of Congress, he chose to engage in devisive ideological battles, rather than promote his space agenda. He had his chance and chose to do something else.
I am in the middle on the tax question. I agree with Greg, but I also agree that, in the current system, tax credits and the rest are tools that we need to use.
— Donald
Donald,
I agree that Gingrich engaged in divisive political battles. Unfortunately, he also proved — to the detriment of our nation IMO — that using divisive language and wedge issues works in politics on the tactical short-term level.
I too would have also loved it if he gave more focus to using the substantial power he gathered for himself in the mid-1990s (by using divisive tactics) to some of his breaktrhough space ideas.
It should be noted that Gingrich did do a few space policy things with his great power that had a good intention, if poor results.
Behind the scenes, Gingrich was critical in creating the X-33 program in support of what almost everybody in the space policy arena agreed was the nation’s #1 priority (Cheap Access to Space). Yes, Gingrich did not understand the weaknesses of depending on NASA to operate an x-vehicle program, but neither did many many other very smart people. (Books could be written on the poor decisions by NASA on X-33.)
In another area, Gingrich had good intentions — and it also generally appeared to be a good idea at the time — but produced minimal results. He is the first serious politician to stand up and publicly advocate the privatization of the Shuttle. In less than a year, U.S.A. was created. The problem is that the privatization of the Shuttle looked like a good thing to do in concept.
In practice, this bought us little benefit as the Shuttle system was already designed and built by a government committee, and privatizing this government design-and-built system after the large majority of the costs and risks of the system were set in stone generated minimal benefits.
Gingrich may or may not have understood this, and he said nothing about the limitations, but neither did many other very smart space people at the time.
However, it was a good initial step at instituting a new policy in our nation — that NASA should NOT be designing, developing or operating transportation systems. Just like the FAA does not design, develop or operate airlines, and the Federal Highway Administration (FHA) does not design, build or operate the highways, and the the Federal Railroad Administration (FRA) does not design, build or operate the railroads.
Oops … we did not learn that lesson very well … think CEV. One of Mr. Griffin’s major changes was to bring much of the design of the CEV in house. I guess NASA beign given another policy exception to something we would never allow the FAA, the FHA, or the FRA to do. And with little national debate.
– Al
Al, I agree with you or don’t disagree with most of what’s above. However, you make one common but key error.
Federal Highway Administration (FHA) does not design, build or operate the highways,
Taking the FHA as “the government,” the United States government, in cooperation with local governments, does indeed design, build, and operate most highways and the freeway network. In fact, it is probably our greatest and most successful example implementation of a government project and social engineering. Without vast government direction and subsidies, no private organization or set of organizations would, or even could, implement such an inherently inefficient and unsustainable system.
— Donald
Donald,
OK, you caught me spouting off about an area that I am not an expert in, and making (at best) an overstatement.
Let’s break this down.
First, does the government really “build” the highways? I have to believe that (in the large *majority* of states) that it is private construction companies who own and operate all the heavy equipment we see on the roads, and who pay the salaries of all those workers (operating that heavy equipment) that we see on the road.
I agree that the government owns most of the roads, and where it is simple and straightforward, they probably produce detailed designs and drawings used by those who construct the roads.
But who designs the more complex civil engineering structures that are part of our highway system? I bet that it is private civil engineering firms who are hired to do the majority of the engineering work for the most complex projects, like the clover leafs, overpasses, and bridges.
That leaves “operating”. Operating a highway is mostly composed of keeping it clean, painting the lines, and filling in potholes. This is not exactly rocket science. But even this is not cut and dried — more and more local governments are outsourcing routine functions like street cleaning, garbage collection, etc.
My point being — even for the highway system there are a lot of functions provided by private industry (in most states). And if the roads are totally scr*wed up for 30 years in your local area, and it costs 10 times what it should cost — this is usually self correcting — you toss out your local elected leaders and get new ones who fix the problem.
– Al
PS – One of your points — that the government “incentivized” the design/building of the roads — does not contradict any of my points. I think there is a definite government role in space transportation — just like the government incentivized railroads, and the air transportation industry.
>committed to over-engineering and risk-avoidance
I have to say that not only NASA and Congress are guilty of risk avoidance, but the entire country.
Try to get a launch license. Jump through all of the hoops FAA/AST put in front of you along with those the EPA require.
Then there is the general public that is firmly convinced that anyone participating in such an endeavor is to viewed at least with suspicion, preferably locked away.
I’m not talking about some joe-blow in his garage, but people and organizations with solid engineering and science credentials.
America IS a risk-adverse society. Do not undertake any tasks that have even a hint of risk.
Sean O’Keefe had a conference on “risk” when he was political appointee to NASA.
But I don’t think anything came of it, just Smokey O’Clover blowing political smoke rings with his cigarettes to say its OK to fly the old lemon. He’s willing to risk cigarette smoke – they never should have let such a risk taker walk away without cancer.
Ralph Nader wrote “unsafe at any speed”, but the automakers have stepped forwards and NASA has stepped backwards regarding acceptable risk. The acceptable risk is forced by Congress and automakers must meet the standards. Cheaters like FireStoned and Mitsi, when caught, get shamed. But there are no standards in human spaceflight, so NASA does not have to feel ashamed to be launching a vehicle that is a step backwards instead of forwards when it comes to minimizing risk to humans.