Category Archives: Economics

Shelby’s Antics

The Houston Chronicle weighs in.

I don’t think this is quite correct, though:

Under the current Commercial Crew Development program, SpaceX contracts with NASA for a flat payment. If SpaceX comes in under cost, it gets to keep the profit. If it goes over budget, SpaceX has to make up the difference. This system gives SpaceX more flexibility to operate as it sees fit.

Shelby has inserted language in a Senate appropriations bill that would instead force SpaceX to work on NASA’s old cost-plus model. This would require the private company to track every step of its development, assign a cost to those steps and charge it to NASA, plus an additional fee. This stilted payment model forces engineers to be accountants and removes disincentives for bloated budgets.

Shelby isn’t forcing the company to cost plus. He’s doing something worse (and stupid), forcing them to account for it as though it were cost plus, but on a fixed-price contract.

The Huntsville Reality-Distortion Zone

This isn’t new, but I don’t think I linked it at the time. Eric Berger reports on the people working SLS:

May turns the cost issue around.

“My question would be, how could we afford not to do this?” May asked. “Great nations explore. Great nations push their boundaries. And this country has continued to the limits of what we know and learn for a generation, and I think we’ve got to continue to explore.”

And in the larger perspective, he argues, SLS does not cost that much. NASA spends about $1.6 billion a year building it, less than 9 percent of the space agency’s total budget, he said, which is itself less than one half of one percent of the federal budget.

“I think it’s a relatively small amount of money to set the leadership for the world in space exploration,” he says.

Count the number of logical fallacies in just those four grafs.