NASA, Other

Endings vs. beginnings

At the Space Access ’08 conference in Phoenix on Friday, Charles Miller, a member of the board of directors of the Space Frontier Foundation, gave a presentation with a provocative title: “The Vision for Space Exploration (VSE) and the Retirement of the Baby Boomers: Is this the Beginning of the End? or The End of the Beginning?” Miller took aim at one of the core assumptions behind the planning for the VSE and its implementation, dating back to the budget projection “sand chart” from January 2004: that NASA’s budget would grow at roughly the rate of inflation for the foreseeable, if not indefinite, future. Current administrator Mike Griffin, for example, has said on a number of occasions that budget growth that keeps pace with inflation would be sufficient to allow humans to land on Mars by the mid-2030s, among other things.

The problem with that assumption, Miller said, is that the budget is facing a major crunch in the relatively near future, as the Baby Boomer generation retires and starts putting increasing fiscal strain on programs like Social Security and Medicare. “Mandatory” programs, like those, now account for 53% of the overall federal budget, compared to 26% in 1962, according to OMB data released last month with the President’s FY09 budget proposal. Discretionary spending, which includes NASA as well as the military and many other agencies, has seen its share of the budget pie shrink from 68% in 1962 to 38% now. Those discretionary programs will continue to be squeezed, Miller believes, particularly once Boomers start retiring en masse around 2010.

“There’s going to be blood on the floor for a wide variety of programs, and it’s going to include NASA,” Miller predicts. “A conservative projection for NASA’s real budget in the long term, for 50 years, needs to take this into account, and should consider significant reductions in the top-line NASA budget.”

In such a scenario, it seems unlikely that the Vision would continue in anything like its current ESAS implementation. That is likely to be true regardless of who becomes the next president, as he or she will have to grapple with the same fiscal realities. “I think it [ESAS] is going to probably die in the next administration,” Miller said. Which begs the question: what should replace it?

Miller said that the goal of going to the Moon, Mars, and beyond can be preserved if one of three conditions can be met: cheap, reliable access to space (CRATS) is achieved; we find an “economically-driven strategic reason” for investing in space; or we address high-priority national security objectives. All those things can be achieved, he said, if the US develops a “reusable space access industry” that includes not just launch vehicles but other infrastructure elements like propellant depots, orbital transfer vehicles, and the like. Such an industry could make civil, military, and commercial space affordable and sustainable even in a severely constrained budget environment.

Miller proposed at the end of the talk to start preparing for “the end of the beginning” with a “National Reusable Space Access Summit”. This event would bring together the major players to develop a “National Reusable Space Access Strategy”, and come out with a short consensus statement that would be the basis for future discussions with government leaders. “I’m throwing this out here to start a discussion,” he concluded.

101 comments to Endings vs. beginnings

  • MarkWhittington

    Miller seems to be assuming that entitlements will never be reformed. The problem is that they had better be, sooner or later, or they will devour all of the federal budget. The projected growth is not sustainable.

  • Dennis Wingo

    So lets get this straight. We don’t have the money for ESAS but we do have the money for an even more expensive RLV program.

    Does not compute.

  • Miller’s analysis is pretty spot on, with a couple caveats:

    1) Even in the discretionary budget, there are huge pressures, including the war on terrorism and the search for clean, secure energy sources. Even in the unlikely event that Social Security and Medicare benefits are reduced ahead of the Baby Boomers’ retirement, NASA’s human space flight programs will probably still get crunched.

    2) Miller makes a bit of a logical leap to reusable launchers. If the federal government does get mired in dire financial straits, it’s not clear that the large up-front investments that are likely necessary to develop a reusable launch infrastructure will be palatable. The key is identifying a launch infrastructure (reusable or not) that is both low-cost to develop and low-cost to operate.

    FWIW…

  • Dennis,
    Charles wasn’t talking about an RLV “program”. He was talking about an active admission by the Federal Government that it can’t afford to do space itself anymore and that Industry and Private Enterprise can do it their way with the government’s active promotion and support (not funding). I.e. an economic and industry development role, not a funding role.

  • MarkWhittington

    “I.e. an economic and industry development role, not a funding role.”

    Even tax incentives and such will be scored as a cost the way the federal government uses static accounting. I get kind of quesy wen people start advocating a lot of government involvement in things like RLVs, which would inevitably mean chosing winners and losers. While I’m somewhat skeptical of Miller’s analysis (in his scenario, we just let entitlements devour everything, including the military, edcuation, highways, and so on), I think that the best thing the government can do regarding RLVs would be tax and regulatory breaks and core markets. The latter means VSE stays in some form.

  • Mike Fazan

    It’s time for NASA to get off this VSE kick and back to solving the problem of achieving affordable access to space. It’s going to take much more than NASA to solve this problem, however. Like alternative energy, access to space needs a broad range of technology investments in order to succeed.

  • Dennis Wingo

    Charles wasn’t talking about an RLV “program”. He was talking about an active admission by the Federal Government that it can’t afford to do space itself anymore and that Industry and Private Enterprise can do it their way with the government’s active promotion and support (not funding). I.e. an economic and industry development role, not a funding role.

    And when you go to wall street asking for money and you say your customer is the government, just how long is it before you are laughed out of the office? That is what Chuck Laur is saying at the same conference is it not?

  • And when you go to wall street asking for money and you say your customer is the government, just how long is it before you are laughed out of the office?

    Who proposed doing that?

  • Habitat Hermit

    Mike Fazan isn’t the reason the Shuttles are three decades old precisely because NASA did focus on “achieving affordable access to space”?

  • Dennis,
    That wasn’t what Charles was talking about at all. What Charles was getting at didn’t have the government acting as a customer at all since according to his estimates the would be no money for it to do so. I think Charles was looking at what the government can do from an economic development/cheerleader/advocate point of view. But maybe I’m just projecting my own biases since Charles really only had a few minutes to talk about it.

  • SpaceMan

    You people really are living in dream land.

    “Private” industry is no such thing. It is just one stop on the circular money flow defined as “private” for accounting purposes. Stop pretending that 18th Century models of how things work make any sense. Accounting systems as modern as our technology or more so are sorely needed if we want to pull ourselves out of the muck.

    Expand your thinking to include the real world instead of the one you see on the inside of your eyelids. Open you eyes and see.

    All that keeps us here at the bottom of the gravity well is a lack of will.

    No guts, no glory.

  • Z-Bob

    I don’t quite get Spaceman’s point about new accounting systems, but he is quite correct about the bottom line. It is a matter of will.

    No where else do I see any interest group worry so much about being as financially frugal as the space crowd. Most groups have the position that the gov’t has been overlooking their cause way too long, and now its time to fork over the cash.

    But when America’s top scientists and engineers come to the table with relatively modest proposals, well then, the same politicians who pour money down ratholes everywhere else suddenly become concerned about fiscal responsibility. There are constant news reports exposing gov’t waste to the tune of at least a billion dollars per agency. You could easily double NASA’s budget with the waste.

    Our interest in space exploration is as legitimate an interest as any other in the nation. We have no obligation to “wait our turn”, to solve earth problems first, to feed people, etc.
    When talking to politicians, don’t approach them with your tail between your legs, demand to know when they plan on making America great again.

  • You could easily double NASA’s budget with the waste.

    Simply doubling NASA’s budget would be a disaster, given the way that they would spend it as currently constituted. NASA doesn’t need bigger budgets. It needs different goals and incentives.

  • Martian

    Message from Mars…

    You know, I think SpaceMan is quite right to say that the only thing holding us back is our will. But I also think it’s NASA’s very poor promotion of itself. Most of my college classmates really know nothing about space, what NASA’s doing, the VSE, Virgin Galactic, ANYTHING! I would say that there is one big reason for this: that NASA’s “marketing” sucks. How many NASA ads do you see on TV? How about little NASA blurbs instead of the boatload of Air Force, Marines, of Army blurbs in magazines (National Geographic, a few of the video game magazines, Popular Science, Scientific American, ect.). There really is an audience for this kind of stuff. It’s just that NASA’s administration thinks it needs to be advertising to the Boomers still. I don’t think any of the guys at the top have really awakened to the fact the Gen-Z and Gen-Y doesn’t want to hear the same stuff as the Boomers did. NASA really, really needs a solid promotion campaign, only it doesn’t. That’s bad management if you ask me.

    I think another thing to is, as Rand said, not so much increasing the budgets. I think NASA needs to “trim the fat” of its spending. I don’t know if any of you have been to the agency’s website recently, but if you look under their current programs you’ll see a LOT of stuff and the first thought that comes to mind is, “Why the hell do they need ALL this junk?” I understand what they’re trying to do, but they need to adapt to the situation better. Thanks be to buget, there some things that NASA just can’t do right now. Bits and pieces. Smaller steps leading to bigger ones would do the agency some good right about now, at least untill their in a better financial position. And here’s where I think Mr. Miller is right on in suggesting that NASA be more cost effective. His plan might not be the best ever proposed, but it’s good to see that he at least has a plan instead of whining about what should happen but not giving any ideas as to how (I recommend Robert Zubrin here). But on the whole, I think it’s good that he wants to get people talking about this. Lets just pray that this goes somewhere.

    The little green men are watching…

  • Z-Bob

    Martian, did you become interested in space exploration because somebody directed a cool ad campaign at you? Or was it something deeper, more innate?
    I was born with a scientific curiosity which was molded by men ACTUALLY WALKING ON THE MOON, and further stoked by science fiction BOOKS that actually had a little science in them.
    Anyone who is drawn to space by an ad campaign this month is going to be drawn away next week by another ad campaign for something else. NASA is a government agency, not a cola company.

    Who gives a damn what Gen-Y,Z, or even old Boomers want to hear? It is the same moon-do you want to explore it or not? We have to put boots on it before we do anything else there. Do you want to quantify the danger asteroids pose to Earth? Then let’s go visit one. Is asteroid mining viable? Then we need to go. Robots aren’t enough. Nothing-solar power stations, Mars trip, whatever-is going to happen without FIRST establishing a manned deep space capability that can reach to the moon and beyond. It is going to cost big bucks. Accept it and let’s go, or reject it and we can stay home playing video games. By the way, the moon landings may have occurred while the Boomers were young and pretty, but it was the WWII generation that actually did the hard work of getting there and it was Korean War pilots that actually flew there. Boomers were just stoned spectators.

    I can’t believe Rand would worry about NASA having too much money. The subject of this thread is about NASA LOSING money. The best thought out goals will remain pixie dust without the money (and will) to implement them. You can’t nickel and dime your way to the moon or anywhere else in the solar system.

  • Dennis Wingo

    I think Charles was looking at what the government can do from an economic development/cheerleader/advocate point of view. But maybe I’m just projecting my own biases since Charles really only had a few minutes to talk about it.

    Michael

    That’s different but I have yet to see Charles actually actively support this part of the dream. You know yourself how many times I have pushed to have Zero G Zero Tax supported, to only have it fall on deaf ears in favor of pushing to have contracts awarded. Now if Chas now has the dream then fine, but up until now that has been the case.

    I welcome everyone to come and play to help support the industry rather than a strategy that favors one group or company in the field. That is one reason this whole thing has fallen apart over the last several years and has pitted one small group against the other, rather than helping to put into place a scheme that benefits everyone, one that everyone can contribute to making happen.

    Glad to see that he has finally gotten religion (if your interpretation is correct).

  • I think that the best thing the government can do regarding RLVs would be… core markets. The latter means VSE stays in some form.”

    Not true. NASA does not need to land astronauts on the Moon to become a customer for privately owned and operated human space flight vehicles. NASA has plenty of human space flight needs in LEO.

    FWIW…

  • Martian

    Message from Mars…

    Z-Bob,
    Sorry if there was any miscommunication here. I understand what you’re saying here. And I agree that the a few ads aren’t going to “put boots” on the Moon, Mars, or anywhere else in solar system. However, politicians may be stupid, but at least they keep tabs on general trends, and form general trends as well. If the politicians can get people’s attention with the economy, then they’ll go hard on the economy. If they can get people’s attention with Iraq, then suddenly we’re all talking about Iraq. And I think NASA needs to step up to the plate, make itself known. Not just to the big-wigs in Washington, but to the general population as well. If there’s no public interest in space, then shockingly there’s no political interest in space either. I honestly can’t say NASA has a right to whine about their budget, Constellation, or anything else when they’re not making much of an effort to make themselves a point of discussion.
    As to Gen-Y, Z, ect. Once the Boomers start retiring, the new talent is going to have to come from these newer generations. And if NASA wants to make plans that extend even into the next thirty, forty, or fifty years, they have to take into account that a new generation might not want to hear about the VSE or Orion in the same ways as the older generations did. In short, NASA needs to be adaptive to its current situation. I don’t think anyone here would be foolish enough to think that the agency will get its budget doubled within the two, four, six year unless some vitally important change is enacted. And until there is more money for our space guys, NASA needs to adapt to the situation its stuck with. Trim a few programs, prioritize, do a little “marketing”, get back on the public radar, and then things might start to improve. With more attention, I think NASA can really make some changes for itself. Or at least, things wouldn’t get worse.

    The little green men are watching…

  • [...] Foust has a full account of Miller’s speech over at Space [...]

  • ken anthony

    NASA is irrelevent. The focus should be on making space commercially relevent. There are people with $10 million dollars or more that choose to live their lives in a customized apartment on essentially a cruise ship. Given the chance, there are likewise people that would like to live in a moon graviity environment. We need to build Sun City on the moon. Legally recognize property rights and you’ll have all the money you need to put in a golf course (these folks already use electric carts as their main vehicle) a hospital (learn the long term effects of low gravity.) The vast majority would make it a one way retirement trip which would provide an economic incentive for logistical missions. That would sure beat a three minute suborbital flight which seems the the most prevalent commercial hope I hear about.

    Lobby congress to respect private property rights. We’ve almost been able to do that right here on Earth.

  • Dennis Wingo

    Rand, in answer to you above, this is what Charles is related to have said:

    Miller said that the goal of going to the Moon, Mars, and beyond can be preserved if one of three conditions can be met: cheap, reliable access to space (CRATS) is achieved; we find an “economically-driven strategic reason” for investing in space; or we address high-priority national security objectives. All those things can be achieved, he said, if the US develops a “reusable space access industry” that includes not just launch vehicles but other infrastructure elements like propellant depots, orbital transfer vehicles, and the like. Such an industry could make civil, military, and commercial space affordable and sustainable even in a severely constrained budget environment.

    I guess that it boils down to your perception of what is meant by “U.S. develops”. That implies that that government develops this. At least one other person in this thread also got that from what he said. It has just shifted from purely focusing on RLV’s to a wider range of activities, which is at least an improvement over the former focus on only RLV’s

    Again, I would submit that the way to incentivise an industry is the same way that it is happening in the solar and wind industry, which through tax incentives, which at this time are direct tax credits (30% of the capital invested) and accelerated depreciation of the asset (5 year MACRS depreciation with 50% allowed in the first year). These would be tremendous incentives for industry. Couple this with the same incentive given the Internet (no taxes in the early years and the Zero G Zero Tax) and you will see a LOT of money flow into the commercial space sector.

    Instead the last decade has been spent by the advocacy community lobbying for the equivalent of giving contracts out for supplying cheap solar panels to the government, or by giving contracts out for building a Cheap Access to Solar Power. All this did is destroy everyone and pitted the little guys, who should be cooperating with each other to attack and compete with each other in unhealthy ways.

    It is to be hoped that the advocacy community has learned from the Kistler and COTS debacles and other recent similar debacles to come up with a framework that levels the playing field (similar tax incentives that wind and solar have) and provides for a tide that lifts all boats.

    The advocacy community in large part has only itself to blame for the current state of affairs. As Ed Wright so aptly coined, the community got the “Highlander Syndrome”

  • Al Fansome

    There appear to be three (3) separate levels to what Miller has “reportedly” stated.

    LEVEL ONE: The Baby Boomers will soon be retiring, starting around 2010, and the true “conservative” assumption is that the NASA’s budget (as well as the budgets of most (if not all) other federal discretionary agencies) will start a period of significant real declines in purchasing power.

    This is a valid point.

    LEVEL TWO: There are three (3) ways to still go the Moon, Mars & Beyond, even in this very difficult budgetary environment: 1) CATS, 2) economic driver, and 3) National security driver.

    I agree with this, and I can’t think of another that I consider “sustainable”.

    LEVEL THREE: Reusable access addresses all three (3) of these drivers.

    Obviously, I agree with this, since I have written on it before.

    Then Mr. Wingo points out that the “How” issue is critical.

    I agree with this too. NASA (and the DOD) have repeatedly failed to produce reusable access. Just think: first we had the Shuttle (was supposed to fly 50 times per year with a marginal cost of $10M/flight). Then we had the NASP. Then we had the X-33/VentureStar program.

    “How” we go about achieving/producing RLVs is critical.

    In my opinion, “HOW” is LEVEL FOUR.

    Again and again we have learned that we can have a “good policy” (think VSE), but the wrong implementation plan can truly mess it up.

    - Al

    “Politics is not rocket science, which is why rocket scientists do not understand politics.”

  • Martian

    Message from Mars…

    I agree completely with Mr. Al Fansome’s analysis of what Mr. Miller was saying, and I thank you for putting it in more “savvy” words than I could have managed at this time. And I think you’re right to say that a good policy can screwed to hell by a bad implementation of said policy. (There other good historical examples of this that I would go into, but that aren’t really related to this issue, or even this site, so I digress). So, yes, well put Mr. Fansome.
    However, I also agree (in part) with Mr. Ken Anthony. NASA isn’t the only body with which we should be concerned. The whole idea of private and/or commercial space is starting to take off, and I think that this is of critical importance. As we’ve seen just by the pitiful state of things at NASA, big government tend to big-foot everything. It was great at first, but now its just a mess. Maybe the time has come to turn space over, at least in part, to private or commercial firms who can pull this off a little more elegantly than U.S. government can. But I think another question to consider is that of manned space flight. I mean, lets not fool ourselves. Now that we can, we’ll ALWAYS be launching satellites into orbit. As for probes, robots, the like. I think it’s fairly safe to assume that they’re cheap and easy enough to not suffer to much, at least not in the near future. So they’re fairly safe. But when we say we’re “space advocates”, I think a lot of us really mean “manned space”. After all, Obama’s not talking about shutting down ACRIMSAT, he’s talking about messing with Constellation. Manned space flight is what’s on everyone’s mind. So the question is, “Will private of commercial entities be able to do something like an Apollo? And if so, would they?” These commercial types aren’t looking to see if life ever existed on Mars, or what the Moon can tell us about the formation of the universe. You can’t really sell that. And any company that wants to do anything has to have something it can sell. Lets face it: science doesn’t sell. But if the privates/commercial space industry can take over, say, putting internet or cell phone satellites into space, or something to that effect, and if NASA isn’t needing to do anything like that anymore, well I think it opens a lot of doors for manned missions. As to the “how”: I think that if commercial entities could build space ports and/or launch pads of their own, and if the general public could at least get talking about space, it might lead the politicians to at least considering some options again, get more active on the space side of things. Beyond that, I don’t know. I’m and astronautics engineering major, not a business or politics major.

    The little green men are watching…

  • I guess that it boils down to your perception of what is meant by “U.S. develops”. That implies that that government develops this.

    It doesn’t imply that at all to me, Dennis. I don’t know about you, but I think that there’s a hell of a lot more to this country (the U.S.) than its government.

    And I’m quite confident that it’s not what he implied, even if some want to mistakenly infer that.

  • Dennis Wingo

    Rand

    The proof will be in his actions over the next few years, one way or another.

  • Dennis Wingo

    Oh, and by the way, cut the self righteous crap, you know better.

  • Kevin Parkin

    If NASA’s budget shrinks substantially I darn well hope they focus what’s left on achieving affordable access to space. But even then, I have doubts that the resources would get to the people who can make a difference.

    …No, I think what’s left of NASA circa 2012 needs to be assimilated into a small new agency that grows from different roots.

  • D. Messier

    Huh. Somebody finally figured this out. The entitlement issue is only one of the problems we’re facing, however. Lots of other issues.

  • New Poster

    Martian wrote: “NASA really, really needs a solid promotion campaign, only it doesn’t. That’s bad management if you ask me.”

    Um…..it’s generally not kosher for the gov’t to spend tax dollars advocating the spending of more tax dollars. When you see ads from the uniformed services, they’re recruiting ads and the legitimte public purpose is filling the ranks. NASA, which is shrinking its much smaller worforce, doesn’t have such legitimate needs and doesn’t have the legal authority to run an “advertising” campaign. The closest it comes is statutory authority to educate the public about sci/tech and its activities, but that budget routinely gets cut first by NASA, second by OMB, and third by Congress because it’s not perceived as a mission.

    When you see ads from aerospace contractors, a lot of them focus on defense because the military has a good “brand” with which they want to associate. Believe it or not, so does NASA. (Whether it’s entirely justified is another issue.) You will see images from the space program pretty frequently in commercials from the large aerospace contractors for those reasons.

    In any event, you can’t advertise your way to a healthy space program.

    Martian also wrote: “Trim a few programs, prioritize, do a little “marketing”, get back on the public radar, and then things might start to improve. With more attention, I think NASA can really make some changes for itself. Or at least, things wouldn’t get worse.”

    This has, allegedly, been going on for years….and years…and years..and years. Just because we’re never satisfied with the results doesn’t mean it hasn’t happened. We may want to consider the possibility that NASA just doesn’t excite the rest of the public as much as our self-selected group.

    BTW: I’ve been an occasional reader of the bulletin board for a while and appreciate Jeff’s work at hosting it and everyone’s comments, even when they’re in violent and sarcastic disagreement.

  • murkanDoofus

    This just in :

    http://www.aviationweek.com/aw/generic/story_channel.jsp?channel=dumbfockrocket

    Scotty Horowitz is going to ‘best guess; US into space.

    America – It’s the dumfockathon that just keeps on giving!

    Ha ha ha ha ha … laughing my @ss off.

  • reader

    even a few more well aimed prizes for suborbital RLVs with incremental performance goals and with unclaimed prize pots carrying forward each year would do wonders to invigorate the industry. Lunar Lander Challenge 2.0, go outside the atmosphere. 3.0, launch a nanosat off the platform. 4.0, do point to point flights
    boost Centennial Challenges prize pots tenfold.

    all that needs to be architected to aim for as many and diverse entrants as possible, from all related technology fields, this will also take care of the “ad campaign” problem. if there is lots and widespread activity, there will be people writing and talking about it.

    crate a new space craze not by doing one single central program, but spraying out various small prizes and programs all across the spectrum. if at all possible, launch rockets from somewhere in Manhattan ;)

    for a relative pocket change ( when compared to ESAS ) you could have so much talk and activity in the field that landing men on the moon ten years later would be practically a slam dunk.

  • SpaceMan

    “…NASA, which is shrinking its much smaller worforce, doesn’t have such legitimate needs and doesn’t have the legal authority to run an “advertising” campaign…” – New Poster

    Exactly.

    NASA is denied, by law, the opportunity to “advertise” to the public. It may only involve itself in “education” activities.

    And if “private” organizations were going to step up, they would have. They are waiting for tax payer handouts so as not to have to “risk” anything even though they are fixated on proven chemical rockets. They were handed the technology decades ago and so far, have sat on their hands. Gee I wonder when these supposed “brighter than the rest of us” slackers are going to “get it” and move off the dime. They have all they need to make a break out & still, after all these decades, beg for handouts (tax benefits, special laws, subsidies etc).

    No guts, no glory.

  • reader

    oh, and one big public event once a year, in the middle of nowhere, is not enough. Barnstormers flew everywhere.

  • SpaceMan

    Just to be clear, Elon Musk has the guts so maybe he`ll get the glory. The rest are simply poseurs. Rutan et al are in a different, simpler category since they are not even trying to get to orbital destinations. The pro-ams (see Black Rock desert launches) are more likely to accomplish something than the “private” wish we could organizations.


    When some of these so called risk takers start emptying their trust funds to fund activities maybe I`ll change my mind about their seriousness.

    No guts, no glory.

  • Anonymous: NASA does not need to land astronauts on the Moon to become a customer for privately owned and operated human space flight vehicles. NASA has plenty of human space flight needs in LEO.

    The net effect of which is a commercial version of NASA’s current infrastructure. That would probably be much cheaper, and by itself would lead to greater things — certainly worth doing — but we don’t take the first major steps to a spacefaring civilization until we can live to some degree off the land, and that means the moon or somewhere else relatively easy to get to.

    A commercial LEO infrastructure is likely to evolve if the Space Station continues. The “something new” that should be government’s role would be establishing a similar market or markets somewhere further out on the frontier — the lunar surface, a hand-full of near-Earth asteroids, and / or the Martian moons.

    As for Mr. Miller’s analysis, I fully agree. If an ideologue like Mr. Bush wouldn’t significantly cut entitlements, nobody will. Oddly enough, the lesson of the last eight years is that the people who appear most credible on this front would far rather play at the expensive game of empire.

    As the Economist once put it, in a Democracy, once the middle class becomes a majority of the population, they vote themselves benefits at the expense of everyone and anything else; if so, as long as we are a Republic, these entitlement programs are unlikely to be greatly cut much in advance of complete inability to pay the bill. This is probably true no matter who is in power.

    This is why the VSE was such an important strategy, by moving forward within current funding. Unfortunately, the VSE strategy was not followed and we probably missed our last pre-retirement boom window.

    SpaceMan: Approximately one-third of my retirement money is invested in spaceflight. I feel that I have put my money where my mouth is. So far, I haven’t lost significant money, but I haven’t made any either. If and when the space industry delivers a return large enough for me to re-invest into something bigger, I will do that. But, right now, the only way for a small guy like me to invest in the space industry is through the stock market, and the space businesses in the stock market are performing even worse than the rest of the economy. . . .

    – Donald

  • cut the self righteous crap

    “self-righteous crap”…?

    And if “private” organizations were going to step up, they would have.

    They are. Sorry you haven’t been paying attention.

    If an ideologue like Mr. Bush wouldn’t significantly cut entitlements, nobody will.

    What in the world does this mean? If Mr. Bush is an “ideologue,” just what is the ideology? It certainly isn’t conservatism.

  • Dennis Wingo

    It doesn’t imply that at all to me, Dennis. I don’t know about you, but I think that there’s a hell of a lot more to this country (the U.S.) than its government.

    Yes Rand the whole “there is a hell of a lot more to this country than its government” spiel. Well yea duh, but if you look at Miller’s presentation I don’t see a hell of a lot of customers out there besides the government for that laundry list of installations. If there are no other customers then the U.S. government is going to pay for it? Hell they can’t even get the satellites that their existing requirements demand funded, what the hell makes you think that they are going to fund anything like that laundry list? That is what Miller was talking about.

  • SpaceMan

    “…They are. Sorry you haven’t been paying attention….” – Rand Simberg (once again on his high horse of self righteousness)

    Get off it Mr. High & Mighty. I`ve been around longer than you and “paying attention” much longer. I know the game and call it when I see it.

    There is no “private” industry & no one playing at orbital access is using their own resources to build out their solution (no, not even Elon et al). All these attempts are subsidized by the tax payer in one form or another. Creating special tax incentives is a subsidy. Signing guaranteed launch contracts is a subsidy. Writing laws conferring special benefits on certain behaviors is a subsidy. Creating “contests” w/”awards” is a subsidy.

    Show us non-subsidized behavior. Manifest the capability. Quit jacking your jaws & actually do something. Put something in orbit (or at least blow something up attempting to do so; take heed of the Black Rock pioneers for instance) or else it is all just all too public moaning & whining.

    Kudos to Donald F. Robertson for admitting to reality. We all do what we can if we are serious.

    BTW…I don`t have to justify anything to anyone here nor do I have “explain myself to anyone. If you were “paying attention” to the complete story you would “get it” w/o explanations.

    No guts, no glory.

  • Rand: It certainly isn’t conservatism.

    I agree. We have yet to see a fiscally conservative president in these United States . . . and advocates for government-financed space exploration had better hope we never do. Oddly enough, the closest in recent years was probably Mr. Clinton.

    If the Economist is correct, and I think they are, we never will see a conservative government in anything but name, except in the social sense of fearing anything that is culturally different or new.

    – Donald

  • [...] Session Four Hobbyspace.com Transterrestrial Musings Space Politics [...]

  • Dennis Wingo

    There is no “private” industry & no one playing at orbital access is using their own resources to build out their solution (no, not even Elon et al). All these attempts are subsidized by the tax payer in one form or another. Creating special tax incentives is a subsidy. Signing guaranteed launch contracts is a subsidy. Writing laws conferring special benefits on certain behaviors is a subsidy. Creating “contests” w/”awards” is a subsidy

    While you are technically correct on the above, you only got most of the point. Look around you outside of the narrow cocoon of the aerospace world. Tax incentives are used across many sectors of the economy to encourage certain types of behaviors. For example we have the homeowners interest deduction to spur home ownership. Many industries have tax credits and tax breaks of many types, to foster industry. The example that I used, the 30% investment tax credit and MACRS accelerated deprecation for large solar installations is designed to foster alternative energy. The nation does this type of thing all the time. There are also direct subsidies but these are fundamentally different than the neutral tax credits.

    My parting of the ways with the Space Frontier Foundation mindset started when certain people started pushing direct subsidies and guaranteed contracts for activities related to NASA. What this did is to shift the bias from a company neutral stance that could help any company with the wherewithal and product to enter the market and do new things in space, to a system whereby companies and people who at one time were on the same side of the table moved into an adversarial mode of operation where politics, lobbyists, and other non market factors began to play an inordinately large role in the process.

    As examples of this you need go no further than the aborted Kistler COTS contract. When they lost that, they tried to put a monkey wrench into the entire process. Or before that, when SpaceX protested a sweetheart deal that Kistler had for data on their ostensibly first mission. This is the same type of divisive competitiveness of an immature industry that killed the majority of the early microcomputer companies that would not work together and were wiped out when IBM entered and took over the market, similar to the dark horse win of OSC over the other COTS competitors.

    Actually there are unsubsidized players such as Bigelow out there in the U.S. and our Orbital Satellite Services Limited in Europe. However, neither of these are launch vehicle companies, which has been the focus of the Foundation over the past decade and a half.

    What became obvious to me several years ago is that launch vehicles and RLVs for orbital flight were premature as the market simply could not support the flight rates that RLV’s demand, nor can they today. I know, there will be blow back by the suborbital guys and God bless em I would support ZGZT for them as well. This is where the concept of tax incentives are far superior to targeted contracts to help incentivise the industry. My OSSL business is on the same level playing field as XCOR or Virgin. Bigelow benefits no more or no less than Virgin Galactic.

    It is hoped that the leadership of the Space Frontier Foundation, after several years of bloody noses, may be beginning to come around and support this approach. I certainly hope so, but your position that all of these are subsidies, while technically correct, belies the vast difference between neutral incentives and the divisive direct subsidies associated with the targeted contract/services model.

  • Show us non-subsidized behavior.

    Elon was engaging in non-subsidized behavior prior to COTS. He didn’t go into business anticipating COTS. If COTS goes away, he’ll continue to develop his vehicles. The fact that he’s willing to take government money if they’re handing out with acceptable strings attached doesn’t mean that he wouldn’t exist without it–it just means he’s not stupid.

    XCOR is not receiving government subsidies. It is allowing the government to pay them for that they would have done with their own money otherwise, albeit more slowly, and they are providing products to the government for the money. That’s not a subsidy, any more than when the government buys research data or hardware from Boeing. The vast majority of funds that will go into Lynx will be private. The Air Force contract is only $750K out of $16M. Its purpose is to provide additional confidence to private investors (and customers), not to subsidize development.

    Jeff Bezos is receiving no government subsidies. Bob Bigelow is receiving no subsidies.

    Sorry, “Spaceman,” but your “thesis” is bullshit.

  • Artemus

    The government has gotten itself in a spot where it has no choice but to buy hardware from Boeing (ULA), so it has to guarantee them a profit or they’ll take their rockets and go home. A no-lose setup like that is just as much of a subsidy as COTS, especially considering the politics behind it.

    Any leads on how I can “allow the government to pay” me for stuff I would have paid for myself? I’d be really flexible. I’d allow them to pay for all sorts of things. Just trying to help out.

  • Maybe I’m just an ignorant foreigner, but as I understand it, the NASA budget is essentially noise in the context of the US federal budget.

    Given that there are other things funded out of the discretionary budget with far bigger constituencies than space, it’s highly likely that if this fiscal crunch eventuates (and these kind of long-range forecasts are always dodgy) that there will be considerable pressure for tax rises to pay for those numerous other things.

    In that case, the NASA budget will probably escape serious cutbacks too.

  • Artemus

    Yes, the NASA budget is peanuts, comparatively speaking. But you have a lot of politicians who think NASA’s budget must be huge. It’s kind of understandable when you consider the world a politician lives in: $23 billion for the Department of Energy and what do you get? Solar energy experiments and conservation posters? Then they look at the moon landings and shuttle launches, and automatically they think NASA must have hundreds of billions to play with. So they campaign on a platform of taking all that frivolous space money and spending it “right here on Earth”. Then they get elected and find out what NASA’s budget really is, and they also find out that most people are still pretty proud of NASA despite all the setbacks, so all that talk of taking away NASA’s money slowly fades away. Wait and see — if Obama wins, that is exactly what will happen.

  • Any leads on how I can “allow the government to pay” me for stuff I would have paid for myself?

    Yes. Make sure that the “stuff” is of value to the government as well.

  • Rand: Elon was engaging in non-subsidized behavior prior to COTS.

    While I have enormous respect for SpaceX and what they are attempting to do, and I have no problem with what I’m going to say next, I don’t believe your statement is strictly true. He was accepting at least indirect subsidies from DARPA and the Air Force long before COTS.

    Artemus: $23 billion for the Department of Energy and what do you get? Solar energy experiments and conservation posters?

    I’d suggest you look a little closer at what DoE funds. A lot of it is scientific work for the military, as well as nuclear research and other expensive R&D. I think most advocates for alternative power, like solar or ocean thermal, would argue that far too little is actually spent on their projects.

    – Donald

  • Habitat Hermit

    Well put Robert Merkel and I would put extra stress on “…long-range forecasts are always dodgy…”. In particular any forecasts that rely on choosing the worst present indicators and/or situations and then extrapolating them on the nonsensical assumption of no change what-so-ever.

    That’s equally silly no matter if the topic is economics or space development and a few of the commenters here manage to do both and then some… ^_^

  • Habitat Hermit

    The word subsidy actually means something fairly specific, here’s one simple definition:
    “In economics, a subsidy is a form of financial assistance paid, usually by the government, to keep prices below what they would be in a free market, or to keep alive businesses that would otherwise go bust, or to encourage activities that would otherwise not take place”

    As ever a sense of relative scope both in size and time is required: paying relatively small sums up front for features, customizations, and/or developments to a product you would like to buy (with those changes) is not a subsidy in any meaningful sense of the word.

  • Dennis Wingo

    Here is a year old but still pertinent exposition on ZGZT.

    http://www.nss.org/adastra/volume19/wingo.html

  • He was accepting at least indirect subsidies from DARPA and the Air Force long before COTS.

    Deposits and advance contracts are not subsidies. And again, he would have been continuing development in their absence.

    Has everyone forgotten the meaning of the word subsidies?

  • Anon

    Rand

    The reality is that without COTS Elon would only be focusing now on the Falcon 1. Yes, he may have stilled planned to do the Falcon 9 and Dragon, but would probably have not been bending metal on them until he had the Falcon 1 operational. Elon is very careful with his money and not getting over extended.

    The COTS contarct, if wish to use the “S” word or not., resulted in Elon accelerating his development schedule for the Falcon 9 and Dragon. Only time will time if this was a good idea or a raod to failure.

  • The reality is that without COTS Elon would only be focusing now on the Falcon 1.

    And that is the “reality” because…?

    Progress may have been somewhat slower, but the government PDR/CDR process has slowed him down as well. He was working parallel development on Falcon 1 and 5 (now 9) before COTS, and he would have been doing so in his absence.

    Why is it so important for some people to believe that SpaceX would not be developing vehicles in the absence of COTS?

  • SpaceMan

    It is said those w/o the ability to communicate articulately themselves descend into the use of profanity. Thanks for, once again, proving that piece of folk wisdom Mr. Simberg. I guess that high horse you are on is a bit too high for you to dismount gracefully. Looking forward to your eventual descent back to reality.

    I DO understand the difference between commerce and subsidy. Several others here have pointed out (some of) your errors in that area so I don`t need to belabor the point. I will, however, point out that you really do need to learn some economics. Maybe you should try starting with learning what externalities are. Then you can move to the next step and investigate how currency utilization distorts perceptions by ignoring reality (all those externalities for instance). The laws of physics are what they are and are not changed by waving lots of currency units at them. Maybe somewhere along the way you can grasp the actual operational meaning of subsidy.

    No wonder the human community is still stuck at the bottom of our gravity well.

  • Thanks for, once again, proving that piece of folk wisdom Mr. Simberg.

    And those who don’t have good arguments rely on horseshit ones like that. I am quite familiar with the meaning of externalities, not that it has anything whatsoever to do with the subject at hand.

  • SpaceMan, you may be interested in this article I wrote some years ago on subsidies versus what I call the “free market radicals.”

    http://www.donaldfrobertson.com/loan_guarantees.html

    – Donald

  • Anon

    © 1994 by Donald F. Robertson.

    This letter originally appeared in International Space Industry Review (ISIR).

    In his argument against loan guarantees for new re-usable launch vehicles, Jeff Krukin of ProSpace presents a very one-sided view of how new commercial technology gets developed in the United States. (“Just Say ‘No’ to Loan Guarantees,” ISIR, 7th December 1988.)

    Mr. Robertson,

    Something is off in the dates in your reference.

    Your opinion piece has a copyright of 1994.

    Your opinion piece references an article from ProSpace purportedly written in 1988.

    But ProSpace did not exist until 1996.

    Furthermore, loan guarantees did not become a major space policy issue until 1998, when Sen. Breaux introduced his loan guarantee program for Lockheed’s VentureStar. It was a hotly contested issue for the next couple years, until it became clear that X-33 was never going to fly because neither Lockheed or NASA were willing to pay for the cost over-runs caused by technical problems.

    http://www.nss.org/news/capsules/capsule33.html

    - Anon

  • Thank you for the corrections, Anon,

    No excuses, but I must have got mixed up with the copyright date when I posted this. I expect the publication date is a typo for 1998. (I typed the intro for the Web site on an OQO ultra-portable laptop with a tiny thumb keyboard.) The letter was published in the final issue of ISIR.

    I will fix these issues with my next update to the Web site.

    – Donald

  • Anon

    Rand,

    And the Falcon 5 was dropped from the develop sequence why??? Oh yes, because it would not meet the requirement of COTS. So Elon skipped it.
    As for the wisdom of that leap forward, time will tell.

    But the reality, despite your hand waving, is Falcon 9 would still be on the drawing boards (no metal bent) if Elon didn’t have COTS due dates breathing down on him. Or do you have any evidence to the contary?

    So given that government funding IS driving his schedule now, like it or not. Give him a few more years, and a bit more experience with space markets, and he will be as hungry for “Sovereign Customers” (government moeny) to close his business plans as Bigelow is. And SpaceX will just be another government contractor.

  • Anon: And SpaceX will just be another government contractor.

    That’s a bit too cynical, I think. Yes, SpaceX, if they succeed at all, is likely to follow the road well traveled by Orbital Sciences, but is that entirely a bad thing? Yes, OSC today is a largely a government contractor — but they are also one of the two most successful builders of commercial comsats, having successfully identified an unfilled niche, and are doing a lot more than, say, Boeing to keep us in the launch vehicle business.

    – Donald

  • Oops, that should have been “two most successful US builders.” Also, truth in advertising: I am a small shareholder in OSC.

    – Donald

  • Habitat Hermit

    “And the Falcon 5 was dropped from the develop sequence why?”

    Because the world is dynamic tending on chaotic and SpaceX realized there was a greater demand than anticipated for a heavier launcher than Falcon 5 that made the Falcon 5 redundant and unnecessary as far as they could ascertain.

    As an observer I got the impression it wasn’t just COTS adding demand for Falcon 9 but also a poorer market response than expected to Falcon 5. Did they ever have more than one Falcon 5 launch at their manifest? And they have more Falcon 9 than Falcon 1 launches on their present manifest.

    It doesn’t matter squat to SpaceX if the customer is Joe Smith or the Government or both, what matters is which product(s) there is a demand for that they can provide (or feel confident that they can).

    If for some reason there should be a demand for a Falcon 5 in the future that makes it worthwhile to produce and sell and whose requirements can’t be met otherwise then they are just as likely to pick it up again.

    Likewise if at a later stage they find that Falcon 9 (if/when established as a very successful, dependable, and safe launcher) can fill a significant share of the market for Falcon 1 by launching multiple Falcon 1 payloads simultaneously then one shouldn’t be surprised if they drop the Falcon 1 too..

  • Anon

    Habitat,

    Yes, a $278 million NASA contract for three launches is a great market, especially as the commercial launches are only going for around $40 million each. Also it should be noted that the $278 million COTS funding is nearly 3 times what Elon put into SpaceX from his own pocket. Its also around 50 million a launch more then SpaceX’s commercial rates. Sounds like a government subsidy program to me despite what New Space apologists claim.

    Doanld – Do you still consider OSC a “New Space” firm or do you regard them as selling out to Washington?

  • Anon: Do you still consider OSC a “New Space” firm or do you regard them as selling out to Washington?

    I think OSC did what they had to do to find a market. Until there is a real market for something — anything — out there that is large enough to support them, other than govenment projects, that is what all new space companies will end up doing. Or, they won’t survive.

    That said, I think even today’s OSC is far more inventive than the Boeings, Lockheed Martins, and EADS of this world. They are playing a very conservative game — developing only what has a market, but then exploiting that market to the full. I can’t fault them for that; in fact, I think it is entirely positive. If we want to have a real-world industry in space than we have to start with a real-world industry. It’s worth noting that of all the “new space” type organizations established in prior decades, OSC is the one that is still with us in a large and profitable form.

    (It is also worth noting that Radyn is trying the follow a similar path, and getting shot out of the water by an investment community who want them to sell themselves to a Boeing or someone as part of an investment “strategy” that is little better than a get rich quick scheme. If you want real, successful space companies, buy stock in Radyn and vote against any attempted merger.)

    Your question is a philosophical question, and I have a philosophical answer. I have argued here before (though not recently) that the greatest problem facing the space advocacy community is that we want instant results. We over-expect and we over-promise, and that has a lot to do with why we are not taken seriously. Establishing a spacefaring civilization, even in just the inner Solar System, is not a project for years or even decades; it’s a project measured in generations and centuries. I think (and fear, since I don’t like that news any more than anyone else) that “new space” could learn a lot about actually achieving their goals by studing OSC.

    For more thoughts putting our challenge in a realistic historic perspective, check out this Op Ed from Space News. Nothing I say in it is good news, and many here have strongly disagreed with the robotics arguments, but I believe the larger historical analogy is far more accurate than the dreams of the “new space” crowd.

    http://www.donaldfrobertson.com/reality_check_v2.html

    – Donald

  • And the Falcon 5 was dropped from the develop sequence why??? Oh yes, because it would not meet the requirement of COTS.

    Do you have a citation for that, or are you just remanufacturing history to fit your predilections?

    But the reality, despite your hand waving, is Falcon 9 would still be on the drawing boards (no metal bent) if Elon didn’t have COTS due dates breathing down on him. Or do you have any evidence to the contary?

    Only Elon’s stated plans at the time, and the fact that the larger Merlin was under development prior to COTS. Do you have any evidence to support your unprovable counterfactuals?

    Again, I wonder why it the possibility of privately developed space vehicles seems so threatening to some that they have to grasp at straws and rewrite history.

    Its also around 50 million a launch more then SpaceX’s commercial rates. Sounds like a government subsidy program to me despite what New Space apologists claim.

    No, it’s simply a reflection of the fact that NASA has more stringent requirements for launches going anywhere near the ISS, and imposes much higher costs on the provider, than commercial customers do, and they have to pay for it.

  • Anon

    Rand,

    You don’t read Elon’s website do you? He dropped development of the Falcon 5 as soon as he got the COTS award. Or are you saying that was just a coincidence?

    Do YOU have any evidence that SpaceX would be bending metal on Falcon 9 WITHOUT the big fat NASA subsidy it is getting from COTS? Sure he had plans, but do you honestly think he would push ahead on the Falcon 9 before getting the Falcon 1 operation without NASA? And don’t forget the engine he was working on was for the Falcon 1 as well as he learned the hard way ablated engines didn’t work as well as he thought.

    Elon didn’t make the money he did by taking unnecessary risks and developing a much more complicated rocket that costs more before you work out the bugs in the smaller version is a huge risk. The Falcon 9 would have been shelved until he had a couple successful flights of the Falcon 1 under his belt. If you don’t believe me ask him.

    The reality that you won’t admit is that SpaceX’s schedule is now driven by its government funding. Even its next launch of its Falcon 1 is to flight text the engine used in Falcon 9 as much as anything else. Yes, it will make it finally operational and place a satellite in orbit. But his big gamble on the flight is the new engine will work in flight as well as it has on the test stand.

  • If a schedule is being driven by customer requirements, that’s not unusual. That the customer happens to be the government does nothing to change that. Still failing to see the point, or that this represents a “subsidy.” I might accept it if he’s taking government money on an ongoing basis to make up for his losses years from now.

  • He dropped development of the Falcon 5 as soon as he got the COTS award. Or are you saying that was just a coincidence?

    No, he dropped it sooner. From Defense Industry Daily, in mid-September, 2005:

    SpaceX initially intended to follow its first vehicle development, Falcon 1, with the intermediate class Falcon 5 launch vehicle. However, in response to customer requirements for low cost enhanced launch capability, SpaceX accelerated development of an EELV-class vehicle, upgrading Falcon 5 to Falcon 9.

    Clearly, Elon was thinking about abandoning Falcon 5 before he won COTS. From May 1985 (three months before), Alan Boyle reported:

    At one point, SpaceX had planned to offer a Falcon 5, with five engines in the first stage and one engine in the second stage. But Musk said “we’re trying to decide whether it actually makes sense to fly the Falcon 5 or not.” The alternative would be to go directly to the Falcon 9, which uses a 9+1 engine configuration.

    He almost certainly dropped Falcon 5 and went straight to 9 because the latter could deliver quite a bit more payload for not that much more cost. The vehicle no longer made business sense by that time, COTS or no COTS. What evidence do you have that he would have continued Falcon 5 in the absence of COTS?

  • Dennis Wingo

    Clearly, Elon was thinking about abandoning Falcon 5 before he won COTS. From May 1985 (three months before), Alan Boyle reported:

    Wow, 1985? Elon was working on the F9 then! Heck he is much more of a geek than we thought.

    :)

    Just razzing you Rand.

  • Charles Lurio

    OK, I was there, and just happened to review my notes an hour ago.

    It’s quite clear to me that Chaz was talking about RLV development under very low-key government funding – if even that’s available. E.g. he suggested that a flight test vehicle for the technologies under the current AFRL FAST program could cost about $80million…and that it would be MUCH more likely to fly if private industry put up, say $50million of that. Hardly a massive program.

    It seemed to me that his point about preserving human exploration goals was pursuing that via development of space access and operations facilities based on _real_ market evolution. That would then create truly low costs and high confidence for the next steps beyond LEO (or beyond Luna, if significant private ops get that far themselves).

    CRATS, as I understood it is founded on these sorts of notions, that fundamental assumptions must change because they don’t work, and what government can best do given the coming budget crash is to do a few high leverage, low cost things to accelerate private space systems progress.

  • Yes, obviously, anyone who followed the link knows I meant 2005 (I don’t think that Alan Boyle had a blog in 1985, either…).

  • Habitat Hermit

    Anon should simply accept defeat and move to another bridge.

    However I still think the portrayal opens up for an interesting discussion and here’s how I look at it. It involves some speculation since I’m no insider.

    “…a $278 million NASA contract for three launches is a great market…”

    I know Anon was being sarcastic and I’m going to disregard the self-conflicting position Anon ends up in when simultaneously arguing that it’s both not “a great market” (i.e. not particularly profitable) and simultaneously a subsidy lucrative enough to in Anon’s view make SpaceX focus on it (i.e. very profitable).

    Let’s take a closer look. First of all the payment is not simply for three launches but a lot more than that.

    “…especially as the commercial launches are only going for around $40 million each.”

    Ok so based on that we’ve got $120 million that we can subtract from the $278 million and thus remove the actual launches from the discussion (including whatever profit SpaceX makes from their pricing of launches). We’re left with explaining the remaining $158 million.

    Next let’s remove the issue of profits unrelated to the launch vehicles themselves from the discussion. A commercial venture usually needs profits to make business sense otherwise we’ll end up with a situation where in this case SpaceX is actually subsidizing NASA. Since we’re not assuming such a reverse subsidy we need to account for this. Here’s where my speculation enters as I don’t know what kind of profit percentage SpaceX aims for with their business. However I do know that space components and development usually demand a high profit percentage due to the low quantities involved.

    Let’s ignore those customarily high profits and be extremely frugal and also assume that SpaceX shows NASA plenty of goodwill on account of all the less tangible benefits they get from working with NASA on COTS (everything from experience, to credibility to other customers, to free PR from announcements, and so on) and say 100% gross profit (not net profit, let’s not even attempt to get into that). If we postulate less gross profit there would hardly be any significant net profit at all.

    So by removing the business issue of profits (very broadly defined) we’re left with half of what we had: $79 million.

    What is NASA getting for those $79 million?

    One very big item that we haven’t deducted yet is the Dragon capsule. The capsule can’t be included in the number Anon supplied for the commercial cost of Falcon 9 launches because the Dragon isn’t commercially available yet and no price for it has been supplied to the best of my knowledge. Remember that all three launches utilize a Dragon capsule.

    Another item that hasn’t been deducted is all the SpaceX work-hours dedicated to meeting NASA’s strict demands on documentation and review.

    Yet another item we haven’t quantified are the actual changes required by NASA in order for NASA to find the Falcon 9 and Dragon combination useful.

    In my opinion there’s no way the $79 million manages to cover all that up front so the only justification for SpaceX actually choosing to go ahead with COTS is the expected future profits after COTS from NASA.

    Otherwise it would make more sense for SpaceX to continue on their own and just ignore COTS even if they’re already building something very close to what NASA wants (both the Falcon 9 and the Dragon).

    Anon wrote:
    “Sounds like a government subsidy program to me despite what New Space apologists claim.”

    I hope everyone understands how this simply can’t be the case and makes absolutely no sense at all.

  • Anon

    Hi Rand,

    You statement for a May 2005 cancellation of the Falcon 5 is interesting given this SpaceX Press Release from February 6, 2006 that the Falcon 5 was still under development. I guess Elon didn’t know you and Alan canceled it the year before.

    http://www.spacex.com/media.php?page=44

    It notes the price of a Falcon 5 launch will be $18 million and the price of a Falcon 9 launch is $27 million.

    But then its only a SpaceX press release, what does Elon know about his business you don’t know better?

  • Anon

    Hi Habitat,

    First, a 100% Gross profit is a great business model. Most firms are happy with 10% Gross and dancing in the street with a 20% Gross for private customers. For government contracts the gross contracts are much less, often around 7%. SO you need to add back most of the $79 million you took out under that excuse. Actually you probably need to all of it back as I am sure the $40 million includes a generous profit margin. Or are you suggesting that SpaceX is gorging the federal government with excess profits for its launches?

    Second, you need to check the documentation requirements for launching private satellites, especially the insurance. I don’t think you will find that are any more slack on paperwork then NASA. Perhaps SpaceX has not realized this yet since that have yet to launch a comsat, but they will get an education on it soon.

    Third SpaceX is claiming that the Dragon is being developed for tourists flights. Surely they should only be charging NASA the equivalent of a tourist mission, say $5 million a seat for 7 seats?

    BTW a subsidy program is when the government pays more then the market price for a product. For example the government buying surplus cheese at twice the market value. This is irrespective of profits as many dairies still make a nice profit selling cheese at the market rate. Only the weak ones NEED the subsidy, but ALL benefit from it. COTS is a classic government subsidy, paying over twice the market price for a service even if you don’t want to use the “S” word.

    My 2 cents..

  • Habitat Hermit

    No you’re talking about net profit, here’s what gross profit is.

    Ordinary grocery stores usually operate at a gross profit close to 100%, i.e. the groceries they sell tend to cost the store about half the price when they’re buying it from a supplier than what they’re charging you (and we’re not exactly talking about an industry with mindblowing profits here ^_^). 100% gross profit only sounds large if one has no idea what it is.

    The point about preparing and doing NASA paperwork is that it must follow NASAs guidelines and practices and unless your customer is NASA there is exactly zero reason to do it their way.

    Perhaps you’re ill-informed when it comes to SpaceX achievements in this regard but so far they’ve passed the NASA documentation milestones with flying colors.

    The comparison with insurance paperwork for launches and payloads misses a very important distinction: in those cases the launch companies and/or payload owners are the customers and the paperwork helps the insurers offer more affordable insurance by weeding out those they would not want to insure and/or pricing according to risk (i.e. fairness).

    SpaceX isn’t selling seats piecemeal to NASA but if you assume a $5 million cost per seat for a capacity of 7 then your overall price for a capsule becomes $35 million. Let me add that SpaceX isn’t selling human spaceflight to NASA and that COTS so far hasn’t provided any funding for such although it is a future option that NASA has prepared as an add-on objective to COTS (hopefully that will come to pass). Still let’s assume the price is pretty much the same as far as the capsule goes since in SpaceX’ case the capsule is deliberately designed to be able to fit such a role.

    Multiply that by three and you’ve got $105 million. Add that to the $120 million of the launches and you’ve got $225 million to deduct from the $278 million.

    So… based on those assumptions and removing the commercial value of a Falcon 9 launch with a Dragon capsule (including the profit on those items) we’re left with $43 million to explain, and after a meager 100% gross profit on the rest only $21.5 million.

    That $21.5 million is supposed to cover all the rest (changes demanded by NASA, paperwork demanded by NASA, testing demanded by NASA, and anything else).

    It’s very doubtful to me that such a relatively small sum is enough to cover those things and calling it a subsidy is plain nonsense (and it really doesn’t become less so by handing back a somewhat twisted non-applicable version of something I quoted earlier).

    (Posted in sort of a hurry so excuse lexical and grammatical errors –I’ll be back later).

  • You statement for a May 2005 cancellation of the Falcon 5

    I made no such claim.

    this SpaceX Press Release from February 6, 2006 that the Falcon 5 was still under development.

    But I thought you said that he canceled it when he won COTS, which happened half a year earlier. You even questioned whether or not it was a “coincidence.” You don’t even seem to be able to keep your own rewriting of history straight.

    But in any event, that news story you linked to has no quotes from Elon about Falcon 5 and 9 from that time period. It’s more likely that the reporter was going on old published information to round out the story, and unaware that the Falcon 5 was no longer planned at that time.

  • I should note to clarify: that thing you’re calling a “SpaceX press release” is not a press release. It’s a news article that they republished on their web site.

    You know, standard procedure is to look over the evidence, and then develop a thesis. You seem to develop a thesis, and then desperately scramble for any straws of evidence that you can find to support it, valid or otherwise.

  • anon

    Habitat,

    You may have linked to a definition for Gross Profit but your Supermarket example is a Mark-up. Big difference.

    Gross Profit is your earning before taxes, interests, etc. That is AFTER your operating costs and overhead have been paid.

    A Supermarket uses Mark-Ups to cover the costs of running the supermarket. You know, the salaries fo the clerks and managers, rent, utilities, insurance and all the store related costs. A Mark-up covers operating costs and overhead. A mark-up is NOT gross profit. Just ask any accountant or business manager.

    Also Elon must be paying his clerks as lot of money if its cost $50 million a launch to do the NASA paperwork. At 100,000 year that is equal to 500 clerks working 1 full year on the paperwork. Do you HONESTLY think this is the case? Do you really think NASA its takes 1 million hours of paperwork to launch a rocket for NASA?

  • anon

    Rand,

    You need to get YOUR timeline straight. NASA announced the COTS winners on August 18, 2006 as this NASA Press release shows.

    http://www.nasa.gov/home/hqnews/2006/aug/HQ_06295_COTS_phase_1.html

    It was at that time the Falcon V disappeared from the SpaceX website.

    Also it was press release of an interview of Elon Musk about SpaceX. But I guess you think he lied to the paper.

    Please, do some research first to get YOUR story straight. Actually the Falcon V is still discussed on their website as a future project so technically its not cancelled, it was just put on hold to deal with COTS. This is a link to their current website.

    A HREF=”http://www.spacex.com/company.php”>http://www.spacex.com/company.php

    Q: I can’t find the Falcon 5 information anymore- what happened?

    A: SpaceX upgraded its Falcon 5 concept to the Falcon 9 largely due to customer requirements for a larger vehicle. Falcon 9 half-bay (dual manifest) missions are available to accommodate payloads that would have been well-suited for the Falcon 5. At this time, it does not make good business sense to develop the Falcon 5 as well. We will review the need for a Falcon 5 as we progress in our business.

    But hey, your a Blogger journalist. Why don’t you just call Elon and ask him the story about the Falcon V. I am sure it will make a good column for you.

    And any case you are just using the Falcon V to dodge the issue. That the Falcon 9 and SpaceX is being subsidized by NASA and NASA is now driving SpaceX’s development schedule, just as other government contractors.

  • anon

    Here’s a working link to their current website.


    http://www.spacex.com/company.php

  • anon

    Rand,

    This is not a SpaceX site, but Astronautix is generally regarded as a reliable source of space history.

    Here is the first paragraph of their history of the Falcon 5.

    Falcon V was a two stage, reusable, liquid oxygen and kerosene powered launch vehicle. The maiden flight was targeted for mid-2005 as of early 2004. It used of the same engines, structural materials and concepts, and avionics and launch system as the Falcon I, differing in having five first-stage engines instead of 1 and a larger diameter. This meant that all the critical components would have a flight proven history even before first launch. By 2006 first launch of the Falcon I had been unsuccessful, and SpaceX had received a contract for the even larger Falcon 9 from NASA. It seemed the Falcon V would be leapfrogged and perhaps never fly…

    http://www.astronautix.com/lvs/falconv.htm

    Note – Leapfrogged due to the NASA contract.

    QED

  • Also it was press release of an interview of Elon Musk about SpaceX. But I guess you think he lied to the paper.

    No. In order to think that, I’d have to have some quotes from him on the subject. As I said, there are no quotes in there from Elon about Falcon 5 or 9. We can’t know the provenance of the comments in the story about those vehicles. Again, as I said (do you have problems with reading comprehension?), a reasonable guess would be that they did the interview with Elon, used some interesting quotes, then did some research on the company to flesh out the story.

    Please, do some research first to get YOUR story straight. Actually the Falcon V is still discussed on their website as a future project so technically its not cancelled, it was just put on hold to deal with COTS.

    My story has always been straight. It was your claim that Falcon 5 was canceled, and at the time of the COTS announcement, not mine. If it was merely “put on hold” (which is your new claim), then that supports my contention that Elon had been thinking about dropping it for a long time, and still may, COTS or no COTS.

    Note – Leapfrogged due to the NASA contract.

    Note – “It seemed…”

    That is, it’s Mark Wade’s guess. Just as it’s yours. That doesn’t make it fact.

    In any event, I’ve already said that even if COTS did influence Elon’s development decisions, so what? That’s what customers do. It doesn’t mean that he’s getting subsidies, or on the government tit.

    I don’t understand why you insist on beating this dead horse any more.

  • anon

    Rand,

    So now Mike Wade is wrong on Falcon V as well. You know Mike works hard to keep his website accruate. If you have evidence that COTS and NASA has nothing to do with SpaceX decision to skip the Falcon V for the Falcon 9 send it to him and he will update his site. That is IF you have evidence, which you clearly don’t.

    I don’t understand why you insist on beating this dead horse any more.

    Simple. You won’t accept the truth about SpaceX.

    It doesn’t mean that he’s getting subsidies, or on the government tit.

    $278 million for launches that would cost commercial firms only $40 million is not a subsidy??? Go back a read what a subsidy is.

    The only thing keeping Elon pumping money into SpaceX are his government contracts. Without them he would have folded and gone on to other projects. Or just be doing Falocn 1 at a low level of funding. SpaceX is now as much a government contractor as Boeing and Lockheed and the Falcon 9 is just as subsidized as the EELVs were. Yes Falcon is available for commercial use, but so are the EELVs if you got the money.

    Now note, I don’t think that SpaceX becoming another Orbital Science or Boeing is a bad thing. Its actually good as it means they will survive and the government and private firms will have a fourth option for launch services. But you need to accept it only occurred because of government subsidies appearing when the private market failed to materialize.

  • The only thing keeping Elon pumping money into SpaceX are his government contracts.

    Of course. Why would he invest if he thought he wasn’t going to get any launch contracts? That doesn’t make them subsidies.

    Without them he would have folded and gone on to other projects.

    Again, of course. But that is a separate issue from COTS. Or “subsidies.”

    Continued repetition of your unsupported counterfactual fantasies doesn’t render them factual. Elon was investing before COTS, and before anyone even conceived of COTS. There continues to be no reason to believe that he would have stopped investing in the absence of COTS.

    And it’s Mark Wade, not “Mike” Wade.

    Why would I correct him on something that no one knows the answer to? Unlike you, he is honest (or not delusional). He says it “seems” to be, whereas you seem to think that you have a direct line to Elon’s mind.

  • Al Fansome

    ANON: SpaceX is now as much a government contractor as Boeing and Lockheed …

    Incorrect. Boeing and Lockheed are willing to bid (and sign) “cost plus” contracts, and everything that means for a corporate culture, structure, and attitude.

    SpaceX is not.

    ANON: and the Falcon 9 is just as subsidized as the EELVs were.

    Incorrect. The EELVs each received $500M for **just** for **development costs** for the launch vehicle.

    Elon has received $278M for a) the launch vehicle, b) a new reusable spacecraft, and c) three actual launches.

    If Boeing and Lockheed had quoted a price for the equivalent of what SpaceX is doing, I estimate it would have been in the neighborhood of $2 Billion (think another $500M for the reusable spacecraft, and $300+M (x 3) for the launches.

    ANON: Yes Falcon is available for commercial use, but so are the EELVs if you got the money.

    Incorrect in the case of the Delta IV. The Atlas V has limited commercial availability, as it is is being offered for commercial sale at one per year.

    FWIW,

    - Al

  • Habitat Hermit

    Anon you poor sod don’t drag marketing-speak into this to try to cover your newly acquired orifices ^_^ (and boy do you have plenty of those!).

    Ok Anon so you have proven that you are unable to read and understand the Wikipedia page, here’s a quote (my emphasis):
    Gross profit or sales profit or gross operating profit is the difference between revenue and the cost of making a product or providing a service, beforededucting overheads, payroll, taxation, and interest payments.”

    Also conveniently noted on the page is that when you take gross profit and deduct total operating expenses then you get net income.

    Yes it’s Wikipedia but at least in this case it is completely adequate as a general introduction and reference and it spells it all out clearly enough that even dullards should experience some enlightenment.

    However you Anon is simply making things up as you go along and show a complete and utter lack of reading comprehension, a non-existent understanding of economics, and absolutely nil experience of any kind with the issues at hand. When someone spells out your errors and you are still unable to comprehend them then it ends the discussion by default because you are either insanely stubborn, a “faux literate” imbecile, or possibly a troll enjoying a good time. That last option actually makes you look good in comparison to the others ^_^

    Either way any prospect of a intelligent conversation is killed and killed again.

    As if that wasn’t enough you display zero knowledge about how much work it takes by engineers to do NASA changes, testing, and documentation. It’s entertaining that you think someone (possibly like you) can simply walk in from the street and do these things at the pay of a burger-flipper (honest work but very poorly paid). Not that only engineers work at those things, there are likely technicians. perhaps a few technical writers and technical illustrators, some management directly involved and so on.

    Anyway these refutations are just overkill by now, no point continuing.

  • Dennis Wingo

    How about something pertinent?

    http://www.seia.org/Navigant_Tax_Credit_Impact.pdf

    This is a document from the Solar Energy Industries Association that details that effects in terms of jobs from the 30% Solar Investment Tax Credit.

    This is how company neutral, industry supporting tax policy can have a beneficial effect.

    WE NEED A SIMILAR DOCUMENT FOR SPACE.

  • anon

    Al,

    Since you like throwing definition around here is one for subsidy which is the core of this discussion. And this is NOT a wikipedia defintiion you may change at will.


    http://www.answers.com/topic/subsidy?cat=biz-fin

    subsidy – Monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest.

    COTS is suppose to be in the public interest isn’t it? And many here seem to feel that having SpaceX as a U.S. launch firm is in the public interest. And paying more then twice the commercial rate for a launch is assistance no matter how you try to cover it up with your Enron style accounting.

    So SpaceX’s Falcon 9 IS being subsidized by the government. Just because they were only able to get $278 million from Uncle Sugar, and not $500 million as Boeing did for the EELV, is because their lobbyists are not as good. Maybe Elon will hire some better ones for the next round of subsidies. But key is the government is subsidizing them and they have become a government contractor. All the attemtps of you and Rand to throw red herrings up doesn’t change that FACT.

    You know even the space press is calling COTS a subsidy. Note this article at space.com

    NASA’s deadline for submitting proposals for the $500 million in subsidies the U.S. space agency is offering under its Commercial Orbital Transportation Services (COTS) demonstration program arrived March 3.

    A HREF=”http://www.space.com/spacenews/archive06/Kistler_030606.html”>
    http://www.space.com/spacenews/archive06/Kistler_030606.html

    So NASA is even calling this a subsidy.

    So why is it so hard for you to admit it? What purpose does it serve you to lie to people about SpaceX and pretend its not just another government contractor taking Uncle Sugar’s money that MY generation will have to pay for when you boomers retire? Is it so you boomers are able to justify raiding Gen Y’s future even more for your Apollo Redux?

    Calling it a New Space firm doesn’t change the fact its making its money the old space way by living off the taxpayers dollar. Is it worth paying the m 90 million dollars to deliver supplies to the ISS when the Russians will do it for $20 million? Or less? Is it even worth keeping the ISS?

    And I don’t know any burger flippers making a $100,000 a year, the figure used to get figure for the 500 engineering clerks one year to fill out the documentation for NASA for a single launch BEYOND what is required for a commercial launch to account for the $50 million extra they are soaking the government.. That is 1 million man hours of paper work. Do you have any documentation that is what it takes to launch the Falcon 9 over launching it for a commercial firm? And I am sure the $40 million Elon is charging private firms already includes a nice profit for himself.

    COTS is just another government welfare program and SpaceX is just another example of corporate welfare. I am hoping that Obama will put an end to corporate welfare once he is elected. That is why I am supporting him over the over-the-hill baby boomers running.

    Yes, that Miller guy is right. When Gen Y kicks you baby boomers out we will cut government waste and NASA will be one of the first to go. The Cold War is long over and there is no need to spend money on those left over Cold War relics like NASA. And calling it New Space doesn’t hide that its just another way to channel MY money into your pockets.

  • Is it so you boomers are able to justify raiding Gen Y’s future even more for your Apollo Redux?

    You’ve obviously idiotically confused us with people who support Constellation, or Apollo on Steroids.

    Hey, you want to zero NASA’s budget? Fine by me.

    But as long as it’s getting billions per year, I’m just trying to see it spent cost effectively, and COTS is a lot better use for the money than most of what NASA’s doing (though that’s damning it with faint praise). And despite the confusion in the space press, and NASA, no, it is not a classical subsidy. If NASA has to pay more for launches than commercial people, it’s because NASA has more stringent (whether necessary or not) requirements than commercial people. That’s like calling it a subsidy when a customer demands special treatment and is willing to pay more.

    And by the way, can you explain how giving SpaceX COTS money channels YOUR into MY pockets? Or is this just (yet) another failure in logic on your part?

  • Sorry, missed an end to the italics. The last four grafs of the above are mine.

  • Someone

    Rand – Why won’t you admit that Anon is correct SpaceX is a government contractor and COTS is a government subsidy program.

    Elon Musk did attempt to find commercial markets, but the only one he found was the Comsat market Lockmart and Boeing have been servicing for decades. So he did the only thing he could do to salvage his investment and went for the green check like XCor and other in the New Space industry are doing.

    Maybe someday there will be a revolution, but for now New Space survival depends on government spending and or billionaires with the space bug.

  • Why won’t you admit that Anon is correct SpaceX is a government contractor and COTS is a government subsidy program.

    It makes no sense to “admit” something that is not true.

    Elon Musk did attempt to find commercial markets, but the only one he found was the Comsat market Lockmart and Boeing have been servicing for decades.

    Government launches are commercial markets, as long as they’re not provided on a cost-plus basis (that’s the key difference between a “government contractor” and a service provider). And he still has Bigelow as a potential customer.

  • Someone

    Rand,

    Are you honestly claiming that COTS was done under FAR 12?

    It was not done under FAR 12, since a competition was held by NASA to select the most qualified bidder for COTS funding. This means it is not considered a commercial service under FAR making SpaceX is a government contractor. That SpaceX is working with a contracting officer on COTS is additional proof they are a government contractor.

    Note that a cost-plus contract is only one model for government contracts, it is not nor never has been the only one under FAR and a cost-plus contract is not what defines a government contractor under FAR or common usage. Like Anon you are inventing your own defintiions to suit yourself.

    .

  • Are you honestly claiming that COTS was done under FAR 12?

    No.

    That SpaceX is working with a contracting officer on COTS is additional proof they are a government contractor.

    The issue is not whether or not they are a government contractor. The issue is whether or not they are only a government contractor, and lacking COTS, would not be in business. Some here insist that’s the case. I say that it’s nonsense, or at least, it’s unprovable unless one takes COTS away and sees what happens. And the implication is that they have become “just another government contractor” which, in the aerospace world, tends to imply cost plus.

  • Someone

    Rand

    Your definition from the “aerospace” world would not stand up in court. And it seems only a common definition among New Spacers, not the aerospace industry.

    You know there is nothing shameful about being a government contractor. Why do you treat it like its a mark of shame?

    And no one said the government is their only customer (SLICK MOVE…), merely that its a critical one to the success of their business model.

    Note his only commercial customers are for the Falcon 9 and Falcon 9 is being driven by the COTS schedule, so without COTS Falcon 9 would not be available as soon as it will be to the commercial firms. So YES, it appears his government contracts did close his business case. Now he just has to get the Falcon 9 operational.

    Honestly do your really believe Elon would be working on the Falcon 9 today, building and preparing it for launch, if he hadn’t gotten COTS? It would have probably stayed on the back burner while he solved the problems with the Falcon 1. Remember that was his stated plan Before COTS.

    And wasn’t the purpose of COTS to use NASA money to create lower cost solutions to space launch? To subsidize their development? So why are you now trying to make it seem like it was an unnecessary subsidy of New Space. That a New Space firm like SpaceX would have done fine without it?

    My .02

  • You know there is nothing shameful about being a government contractor. Why do you treat it like its a mark of shame?

    I don’t. It’s those who accuse SpaceX of having become one who are doing that. There is nothing wrong with being a cost-plus contractor (other than the fact that one would be foolish to expect any cost-saving innovation from them), but the fact remains that SpaceX is not.

    And wasn’t the purpose of COTS to use NASA money to create lower cost solutions to space launch? To subsidize their development? So why are you now trying to make it seem like it was an unnecessary subsidy of New Space. That a New Space firm like SpaceX would have done fine without it?

    I’ve never denied that COTS accelerated SpaceX’s development schedule. My beef is with people who claim that in its absence SpaceX would be making no progress at all, or even out of business (with the implication that no one can make it in the space business without NASA money). If COTS was “necessary,” it was necessary for NASA, which needs some way to continue to support station after Shuttle retires, not for New Space, which has its own funding sources and schedules, even if they don’t necessarily support NASA’s needs.

    One more time–Elon was funding SpaceX before COTS, and before anyone conceived of COTS, and in its absence, there’s no reason to think that he wouldn’t have continued to fund it. He’s not stupid, or ideological, and he’s happy to take money from wherever he can find it, if the strings aren’t too numerous and onerous, but that doesn’t mean that he’s dependent on it. Whether or not SpaceX would be doing “fine” without it is a matter of how one chooses to define that word, but it would be moving forward.

  • Anon

    A pig is a pig even if you call it something else. SpaceX is a government contractor no different then the rest. Stop trying to define what it is to avoid reality. New Space is as much a government welfare program as old space is. Only old space has produced results like the ISS and Mars rovers. New Space just talks about what it will do someday.

  • Only old space has produced results like the ISS

    Which is exactly why we need New Space.

  • Someone

    Rand,

    Its easy to tell if an firm is a government contractor. They must deal with a government contracting officer and meet the various E.O. for government contractors. If SpaceX is doing both it is a government contractors.

    As for cost-plus contracts. Firms like Boeing and Lockheed started out like SpaceX many decades ago thinking they could seel to the government like any other customer. There long scars, financial and legal, are why the have the policies in place now for dealing with the government and why they psuh for cost-plus contract. SpaceX will move to pushing for cost-plus as well once they get burned a few times by NASA.

    The only different between New Space and Old Space is that New Space hasn’t learned the hard lessons of having the government as you prime customer that Old Space has. They will.

    Now I must be off to the desert to do some work on one of those non-government contractors contracts with the government that is keeping them in business, and paying my salary. Enjoy your debate with Anon.

  • Jeff Foust

    It’s time to close off this debate between Rand and Anon/Someone.