Category Archives: Business

Huh?

Why does the Air Force think that their launch costs will go up with the new policy? Look at the caption of the picture:

Less demand could drive up costs for rocket propulsion systems used to launch Air Force satellites.

This makes no sense. How is flying additional missions for NASA creating “less demand”?

There are two factors that will affect the price of EELVs with the new policy. The first is that adding failure on-set detection to the vehicles may increase their production cost, but I can’t imagine it will be by much. Most of the cost will be in development, which could legitimately be charged to NASA. The second is that increased demand will provide a higher flight rate (which the system is quite capable of, in both production and operations), which will allow the amortization of fixed costs over a larger number of flights, reducing the cost (and presumably price) per flight. From that standpoint, the Air Force should welcome this (and always should have, and in fact not approved NASA’s Ares plans). Moreover, a couple years ago the Air Force was considering forcing one of the lines to shut down, to save fixed costs, which goes against the doctrine of assured access to space, because if there was a problem with the remaining vehicle (whether Atlas or Delta), the Air Force would have no ability to launch its satellites. Increasing the demand like this allows both lines to continue affordably. I just don’t understand the concern.

Is there anyone who can explain this?

[Update a couple minutes later]

I see that Clark Lindsey is scratching his head, too. I just don’t know what Gary Payton is thinking.

[Update a few minutes later]

Commenters over at NASA Watch can’t figure it out, either. So it’s not just me.

[Update a few minutes later]

OK, I’m starting to infer that the problem is the production base for the solids. Apparently, ATK and others have been sharing fixed costs between NASA and the Air Force, and if NASA is no longer purchasing SRBs, as Shuttle ends and Ares doesn’t begin, the Air Force will have to bear the full burden.

Well, boo frickin’ hoo. So the taxpayer will no longer be subsidizing the Pentagon with NASA’s budget, and the actual cost of maintaining our missiles and boosters for defense will become more transparent. Why am I supposed to be concerned about this?

Five Lies

about the economy:

1. Bold government action staved off a Depression, saving or creating 1.5 million jobs.

“Just remember,” Treasury Secretary Tim Geithner said on November 1, 2009, “a year ago today, last year, you had markets around the world come to a stop. Economic activity just stopped, came to a standstill, like flipping a switch.”

Geithner implies that the American business climate improved substantially in the first year of the Obama administration. In fact, nearly every indicator, from employment to freight transport to rents to retail sales to real estate, has headed steadily south. In some cases, such as unemployment, the numbers have been far worse than the Obama economic team’s worst-case projections. In others, such as real estate, the weakness of the market is masked by expensive government support, including but not limited to the unkillable First-Time Homebuyer Credit, an assault on loan underwriting standards (see Lie No. 2) by the Federal Housing Authority and the government-run mortgage giants Fannie Mae and Freddie Mac, and the completely opaque $75 billion Home Affordable Modification Program (HAMP).

The $787 billion in stimulus spending authorized by the American Recovery and Reinvestment Act of 2009 is now best known for its inflated and unsupportable job creation numbers. At press time, Council of Economic Advisers Chairwoman Christina D. Romer (who, confusingly, made her academic reputation proving that fiscal stimulus did not help the U.S. economy during the Great Depression and World War II) was giving the stimulus credit for 1.5 million American jobs in 2009. All efforts at checking her claims, however, have turned up very different numbers.

There’s a lot more.

The Economic Ignorance

…of Pat Buchanan. Some thoughts:

True, the United States imports a lot of stuff, particularly stuff made by low-wage, low-skilled workers. Everybody’s got a comparative advantage, and sweatshops aren’t ours. I can live with that. But here’s a shocker: The majority of the stuff we import is not consumer goods. The majority of what we import is stuff we use for manufacturing. As Daniel Ikenson reports, as recently as 2006, 55 percent of our imports were industrial components, i.e. stuff that goes into our factories as inputs and comes out as products. Ikenson: “Meanwhile, U.S. factories remain the world’s most prolific, accounting for more than 20 percent of the world’s added manufacturing value. By comparison, Chinese plants account for about 8 percent. And manufacturing is thriving in large measure because of international trade. Manufacturing exports and imports hit records in 2006.”

These kinds of arguments aren’t academic. When implemented as policy, protectionism can destroy, or prevent the creation of, trillions of dollars worth of wealth. It was one of the few areas of policy that Bill Clinton got right.

More Depressing Space Policy Ignorance

This article at the Salt Lake Tribune is a case of the blind reporting on the blind. The ignorance starts in the very first sentence:

A group of House members says it makes more sense for NASA to slow the development of a new space shuttle rather than kill the program.

There is not now, and never has been, development of a “new space shuttle,” except to clueless people for whom the phrase “space shuttle” means “NASA launch system to get people to and from space.”

In a letter sent Thursday, 15 House members — including Utah Republican Reps. Rob Bishop and Jason Chaffetz — asked NASA’s top administrator to develop a plan to continue the Constellation program using only the money already set aside by President Barack Obama. They want a response within 30 days.

So, they’re talking about Constellation, not a “new space shuttle.” And that’s not what they’re asking for, at least according to the press release from Culberson’s office, which says they’re asking the administrator to:

…appoint a team of NASA experts to review how exploration spacecraft and launch vehicle development and testing may be maintained within the proposed budget request to ensure uninterrupted, independent U.S. human space flight access to the International Space Station and beyond. The team should report back within 30 days in order to provide the administration and Congress with this necessary information – before the President’s space summit in Florida on April 15.

I could provide that report right now — I don’t need thirty days. It’s a two-word report. “It can’t.”

It never could. No amount of study, or budgetary legerdemain, makes it possible for “exploration spacecraft and launch vehicle development and testing” to “ensure uninterrupted, independent U.S. human space flight access to the International Space Station and beyond.” And in fact, we haven’t been able to do the “beyond” for almost four decades, so the horse has long fled the barn on the ability to do it “uninterrupted.” The gap has been known of and planned for six years now, since the new policy was announced in January of 2004 to retire the Shuttle this year, with plans for an ability to get people to orbit on the “Crew Exploration Vehicle” in 2014. That was cemented a couple years ago when production of new tanks and other things was shut down. That was the time to do something about it. It can’t be done now with all the money in the world, and the notion that it can be done within the current budget request could only come from someone completely unfamiliar with what’s going on, and budgetary reality in general. The most near-term solution, though, has nothing to do with Constellation.

The fastest way would be to provide SpaceX, Boeing, Lockheed Martin and ULA with incentives to develop alternate means of access. Atlas and Delta are flying now, and it looks like Falcon 9 is likely to be flying this year. Dragon is built, and mostly needs a launch escape system, which could be developed in a couple years given sufficient funds, and Boeing could probably do a crash program to accelerate the “Orion lite” it’s been working on with Bigelow, while the Atlas and Deltas could have failure on-set detection added in parallel. I do think that with unlimited funds, we could have our own crew access, redundantly, by 2013. But Constellation would be completely irrelevant. And as already noted, these fantasists don’t want to (and couldn’t if they did) provide unlimited funds. Here’s an example of the complete disconnect with reality:

“We can still go forward with Constellation without necessarily having a significant increase in the amount of money that was there,” Bishop said.

Sure, you can go forward with Constellation with no budget increase, but you’ll have to cut something else, and given that the current high-probability date for first flight was 2017 with hoped-for budgets, which would be delayed even further without the increase, it does nothing to achieve the stated goals. What he’s really saying is that “we can maintain the jobs at ATK if we keep pouring money down the rat hole.”

More awful reporting follows:

The letter is the latest attempt to block Obama’s plan to cut funding to the Constellation program. The president plans to shift the $3.5 billion to the International Space Station and other scientific research. In place of Constellation, NASA would support private companies that are trying to develop a space vehicle to ferry U.S. astronauts to the space station.

No, private companies are not replacing Constellation, which was an overall architecture with the stated intent of providing a system to allow return to the moon, not to the space station. It included not only the Ares launch vehicles and Orion capsule/service module, but earth-departure stages and lunar landers. Very few people (even people in the industry) understand what Constellation was, conflating it with Ares, or Orion, or both, or “space shuttle replacement,” or whatever NASA is doing this week in manned space.

Under Obama’s plan, NASA would have no ongoing attempt to return humans to the moon or beyond, though the president has announced plans for an April 15 space conference in Florida to discuss NASA’s future.

No, Obama’s plan would have ongoing attempts to return humans to the moon, and beyond, and in a much more cost effective way that would allow it to happen sooner. It just won’t use “Constellation,” and it won’t look like “Apollo on Steroids,” which apparently, for some people, is the only thing that a human space exploration program can look like.

Constellation, which President George W. Bush created in 2005 to develop a new manned space vehicle, has cost more than originally anticipated and has run into production delays. The White House argued the program “was not clearly aimed at meeting today’s national priorities.”

Gaaaahhhh. No, Constellation was created by Mike Griffin, as a particular way of implementing George W. Bush’s Vision for Space Exploration program. Bush had nothing to do with it, other than hiring Griffin, and then apparently paying no more attention to what NASA was doing. And it wasn’t just to “develop a new manned space vehicle.” As already noted, it was an entire (flawed and unaffordable) lunar exploration architecture.

The Obama administration also disagrees with Bishop that Constellation can continue without increased funding. In the budget, the administration cites a previous blue panel study that found Constellation wouldn’t be able to land on the moon until the 2030s and to do so, the government would have to abandon the International Space Station in 2016.

Gee, they cited an actual study. But Bishop knows better:

Bishop called Obama’s cut “naïve” and argues that it will not only cede American space superiority to Russia, India and China, but it will hurt national security.

“The kinds of people and the kinds of jobs that build a rocket to put a man on the moon, are the same kinds of jobs and the same kinds of people who build missiles to defend this country,” he said.

In light of his other beliefs, let us all bask momentarily in the glow of incandescent irony of Bishop calling anyone else “naïve” on the topic of space policy. I’ve got an idea. If it is really “ceding American space superiority to Russia, India and China” to develop cost-effective, robust home-grown access to earth orbit and beyond, instead of continuing to maintain a jobs program that might deliver a monolithic fragile NASA-owned system sometime in the 2020s that will cost billions to fly each time, then let them be superior. And if it’s an issue for national security, why don’t you go find the money at the Pentagon? Not that I’m a big fan of giving NASA more money, at least for what it’s been doing in human spaceflight, but if I were the agency, I’d be getting tired of having my budget hijacked for foreign relations (cough — ISS — cough) and “national security” (lord knows what) purposes, instead of for actual, you know, space stuff. If it’s really that important, we have other government agencies responsible for funding that kind of thing. And if you want people to build missiles, pay them to build missiles. There’s not much in common between building a missile, and building exploration hardware.

Like the other House members who signed the letter, most of whom are Republicans, Bishop discounts private space vehicles as “unproven.”

Yes, pay no attention to that string of successful Atlas launches, or the fact that SpaceX has put a rocket on the pad, and developed a crew entry capsule, for less than it cost NASA to do a single test flight of a vehicle that has little heritage to the one they plan to eventually fly, years from now, at a cost of billions per flight. No, NASA and Ares, aren’t “unproven.” With Shuttle, X-33, X-34, SLI, OSP, they’re conclusively proven to be high-cost, low-activity disasters, albeit job producing, until the programs implode.

I continue to be amazed at these so-called Republicans not only showing little faith in, but actively bashing U.S. private enterprise, with nonsensical arguments.

But forget all that other nonsense he said. As I noted, here is the real reason that he wants to keep the program going:

He said the Constellation cuts would eliminate thousands of jobs at companies already working on the project, including hundreds in his district. ATK is developing the Ares rocket in northern Utah, which would launch the new vehicle out of Earth’s orbit.

You don’t say. So, pork over progress. Par for the course with space.

[Update a few minutes later]

One other point to keep in mind when you hear people talking about “stretching” out or delaying programs (as the clueless education staffer did during Obama’s primary campaign, or these congresspeople are doing now): there is, in theory, is cost-optimal schedule for any given program. Try to accelerate it, and the cost goes up (and there is a limit to how much you can do so even with a bottomless wallet, as illustrated by the problem of trying to get a baby in a month using nine women). Stretch it out, and the cost goes up as well, though the annual costs can be reduced, due to inefficiencies of keeping people on but working at a less effective pace. Unfortunately, the tendency of government programs is the latter, because they are funded on an annual basis, and the most important budget to the Congress is always the next year’s, since they have no control over future years, and that’s the one that will cause the most political pain to them at the next election. Add to this the fact that future expenditures are discounted (a typical rate we used to use for cost analyses for government programs was the cost of T-bills), and costly program stretches become inevitable.

The Shuttle is a classic example of that. They ended up spending billions upon billions more in life cycle costs and annual operational costs, and arguably having a program failure, in terms of the original goals, because they were unwilling to spend the money up front in development. The people paying the bills in the seventies didn’t have to worry about what the operational budgets were going to be in the eighties, nineties and aughts. And when those budgets came along, the only choice was to pay them at the time, and they couldn’t afford to augment them with new development budgets to make things cheaper in the future. Which is in fact why we have “the gap.” It was recognized in formulating the VSE that NASA wasn’t going to get money from Congress to develop a shuttle replacement (in terms of human access to LEO) at the same time we were operating Shuttle, so serious development couldn’t begin until that program was shut down.

If Congress had really been concerned about “the gap,” they would have provided the funding to avoid it. But they didn’t, and they won’t, because space isn’t important, despite all the nonsense about the Chinese and Indians and national security. All that matters is the jobs, and those only to the congressmembers whose constituents are affected. All of this talk about thirty-day studies is just posturing.

Just In Case The House Dems Are Stupid Enough To Believe Harry Reid…

The Senate Republicans have the votes to prevent “fixes” via reconciliation.

What’s important for people to understand (including the wavering House Democrats) is that once the Senate bill passes the House, Obama can simply sign it, and the war is over. They have no incentive to keep their promises. Or at least not enough to do so. And even if they want to, as noted above, they won’t be able to. So it has to be stopped now.

[Update a few minutes later]

For those who comment without following the link (far too many), let me provide a couple quotes to make it clear:

“There are a lot of things they want to see fixed that are going to be subject to parliamentary point of order in the Senate,” Kyl said during an interview on Fox News. “And we believe we have the votes to sustain those points of order, which means that those things will come out of the legislation.”

“…It is a very risky proposition for those Democrats in the House who are nervous about their reelection, and are banking on the Senate banking [sic — I assume he means “bailing” — rs] them out,” he said. “It’s probably not going to happen.”

That’s the way I’d bet. But maybe they think that “transforming America” is more important than keeping their seats. I hope not.

[Thursday morning update]

Michael Barone says that the Dems have put themselves in a no-win situation. Well, since their victory is the Republic’s defeat, good.

It’s beginning to look like the goal of health-care legislation was a bridge too far. There’s a reason it’s hard to pass unpopular legislation on party-line votes. It’s not the Senate rules. It’s called democracy.

Unfortunately, the misnamed Democrats don’t appear to believe in that.

The Coming Fiscal Disaster

The latest CBO report:

According to CBO, the Obama budget plan would run up much larger budget deficits and pile up even more debt than the administration reported in February.

Over the period 2010 to 2020, CBO expects the Obama budget would run a cumulative deficit of $11.3 trillion — $1.2 trillion more than the administration predicted. By 2020, total federal debt would reach an astonishing $20.3 trillion — up from $5.8 trillion at the end of 2008.

The president likes to say he inherited a mess. He did in fact enter office during a deep recession that sent deficits soaring on a temporary basis. But his policies have unquestionably made an already difficult medium- and long-term budget outlook much, much worse. The problem is that President Obama is a world-class spender. He wants to pile massive new commitments on top of a bloated and unreformed government. He is willing to raise taxes to pay for some of his wish list, but far from all of it. For the rest, he plans to run up the nation’s debt with reckless abandon.

Fortunately, the people are finally on to him.

[Mid-morning update]

More from Veronique de Rugy. Look at the graph.