I realized last week that I hadn’t posted on my blog since December. It’s not for lack of interesting material. It’s just that so much of it is disturbing (White House, Congress, National Space Council, etc.) Here’s today’s post (and I hope to process a pile of notes for other posts over the next couple of months).
The redoubtable biographer Walter Isaacson* has composed a glowing review of two new books for the New York Times about the so-called “commercial” space race. The books are The Space Barons, by Washington Postreporter Christian Davenport,** who has provided much breathless coverage of this alleged new “commercial” space race for the paper; and Rocket Billionaires, by Tim Fernholtz, a reporter for Quartz.
In his review,*** Isaacson heaps further praise on Elon Musk – founder and head of SpaceX – and Jeff Bezos – founder and head of Blue Origin – two billionaires who have long been lionized by the media for being “innovative” and, let’s face it, filthy rich. (He liked the books, too.)
Isaacson writes of SpaceX’s and Blue Origin’s bids to use rocket launch facilities at NASA’s Kennedy Space Center: “Musk won the bidding for Launch Pad 39A…Bezos bought the nearby Launch Complex 36…. The transfer of these hallowed pads represented, both symbolically and in practice, John F. Kennedy’s torch of space exploration being passed from government to the private sector — from a once-glorious but now sclerotic federal agency to a new breed of boyish billionaires who embodied the daring passion and imagination of history’s great pioneers, adventurers and innovators.”
That prose seems rather over the top… (but you can read the review and decide for yourself).
And, by the way, SpaceX and Blue Origin have leased, not bought, those NASA launch facilities. I don’t know how NASA calculated the value of these leases. I doubt, though, skeptic that I am, that their values fully account for the taxpayers’ investment in building and maintaining these facilities over the years.
It bothers me that while the mainstream media typically frame Musk and Bezos as heroic rocketeers who are changing the face of the aerospace industry, they have paid little attention to the value of government support they have obtained to develop their rocket companies. Both Musk and Bezos are avowed libertarians. It doesn’t seem very libertarian to go after government support. Then again, it’s their companies, not themselves, that are going after all the support they can get.
Like many rocket companies before them, SpaceX and Blue Origin have been building their businesses with a combination of direct and indirect government subsidies, government contracts, and “economic incentives” from state and local governments. (It would be an interesting project for an investigative reporter to try to tally up all the taxpayer money and in-kind contributions these companies have received from various government entities and then tally up what the taxpayers are receiving in return.)
Musk became a wealthy man in 2002 when he and his cofounders sold their company PayPal for $1.5 billion. Musk founded SpaceX in 2002 (when he was only a mere multimillionaire, not a billionaire). In October 2011, Forbes estimated that Musk was worth $680 million. Musk landed on the Forbes Billionaires List in 2012 with a net worth of $2 billion. Forbes reportedin 2012 that Musk owned two thirds of SpaceX. Musk’s current net worth is $19.3 billion.
SpaceX was NASA’s fourth-largest contractor in fiscal year 2017 and has been on the list of top 100 federal government contractors for several years. (See below for more details.)
As far as anyone can tell, Jeff Bezos is the sole owner of his rocket company, Blue Origin, which he founded in 2000. According to C/net News, Bezos “watched his personal wealth shrink by 78 percent, from $8.9 billion to $1.9 billion,” in 2000.As of yesterday, hisnet worth was $126.5 billion.
NASA’s Office of Inspector General (OIG), has looked into the agency’s use of so-called Space Act agreements (SAAs) to support space projects such as the SpaceX and Blue Origin launch vehicles (“NASA’s Use of Space Act Agreements,” audit report, June 5, 2014). SAAs are not subject to Federal Acquisition Regulations.
According to the OIG, “The number of SAAs increased by more than 29 percent between fiscal years (FY) 2008 and 2012…. NASA’s use of funded SAAs is a relatively recent occurrence and to date most funded SAAs have related to the Agency’s efforts to develop commercial spacecraft capable of transporting cargo and crew to the International Space Station…. Since 2006, NASA has entered into 15 funded SAAs with eight private companies ranging in value from $1.4 million to $480 million, with a total value of more than $2.2 billion.”
NASA awarded SpaceX a funded SAA valued at $396 million in 2006 and awarded Orbital Sciences Corp. a funded SAA valued at $288 million in 2008 “to facilitate U.S. private industry demonstration of cargo and crew space transportation capabilities.” SpaceX got two more funded SAAs worth $75 million (2011) and $460 million (2012) to further develop its commercial crew capabilities.
According to a Wikipedia entry on Blue Origin, NASA awarded the company $3.7 million in funding in 2009 by means of a SAA to develop “concepts and technologies to support future human spaceflight operations.” In April 2011, NASA granted Blue Origin another $22 million for continued work on those concepts.
Boeing got three funded SAAs to develop its commercial crew capabilities – for $18 million (2010), $112.9 million (2011), and $480 million (2012). Boeing’s profits (a.k.a. net earnings) for 2012 totaled $3.9 billion.
Florida Today reported on December 19, 2017, that the Brevard County board of commissioners “approved a plan that would allow the county to borrow money to pay for an $8 million economic incentive to rocket manufacturer Blue Origin…. The cash grant to the company was approved in 2015 by the County Commission and the North Brevard Economic Development Zone board.”
Forbes reported April 27that Bezos – “the world’s richest man and only centibillionaire, got $9 billion richer in two days.” By the end of that day, his net worth totaled $130.2 billion. Why should his rocket company need any sort of taxpayer assistance whatsoever?
According to Subsidy Tracker, SpaceX has received $3 million in state and local government subsidies and $106 million in federal loans, loan guarantees and bailout assistance (not including repayments). Blue Origin does not appear to be in the Subsidy Tracker database. If you have the stomach for it, check out Subsidy Tracker’s long list of state and local government subsidies that Amazon has received over the past 15 years or so.
The Austin American-Statesmanreported on January 29, 2018, that SpaceX was seeking an additional $5 million in funding from the state of Texas to build a spaceport there: “About $15.3 million in state funding already has been set aside for SpaceX’s planned Boca Chica [TX] spaceport, but only about $3 million has been disbursed so far — and SpaceX has returned a small portion because it has fallen
Now, back to Isaacson’s book review… In it, he claims that Musk’s “SpaceX venture had become the first private rocket company to launch into orbit with a payload.” This claim is not accurate. Lockheed Martin and Boeing are private companies – that is, for-profit corporations – that have been launching payloads for decades. Orbital Sciences Corp. (now a part of Orbital ATK) began launching its Pegasus rocket in 1990 – just before it transitioned from a privately held commercial business to a publicly traded commercial business.
Among NASA’s top 20 contractors for fiscal year 2017 were Boeing (#2, $2 billion), Lockheed Martin (#3, $1.4 billion), SpaceX (#4, $977 million), and Orbital ATK (#5, $738 million). SpaceX was #57 on the list of top 100 federal-government contractors for 2017. Lockheed Martin was #1 on this list, Boeing #2.
* Isaacson has written biographies of Benjamin Franklin, Albert Einstein, Steve Jobs, and Leonardo DaVinci. He also is the author of The Innovators.
** Christian Davenport works for the Washington Postand has written a book about Jeff Bezos and other “space barons.” Bezos owns the Washington Post.
*** The review appeared online April 24 and in the print New York Times Book ReviewApril 29.