Elon Musk’s SpaceX Example of Crony Capitalism

Steve Sherman
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Posted: Jun 08, 2016 12:01 AM
Elon Musk’s SpaceX Example of Crony Capitalism

Elon Musk is the man behind Space X. In case you don’t know, Space X is a somewhat private entity in the business of space travel. They state on their website that “SpaceX designs, manufactures and launches advanced rockets and spacecraft. The company was founded in 2002 to revolutionize space technology, with the ultimate goal of enabling people to live on other planets.”

Pretty lofty goals to say the least. No matter how cool that sounds, getting rockets to successfully launch is an expensive undertaking. It’s not uncommon to watch billions of dollars explode on the launch pad. Elon Musk hasn’t self-funded those explosions…he’s had friends in high places of government to help ease the pain.

The Los Angeles Times tells a story that isn’t so starry.

Musk is apparently a huge Beatles fan, because he gets by with a little help from his friends in government. SpaceX has enjoyed $5.5 billion worth of government contracts. Another $20 million in economic subsidies from Texas where the launch site is meant to be located. Don’t forget the 15-year tax break that takes about $3 million from local schools. Then there is the $4.9 billion in government subsidies Musk received for his three companies. In addition to the billions in from state governments as well. You might think SpaceX was set up as a government money funnel…not a space exploration company. Sorry to be so cynical, just keep looking to the stars and dream of living up there! Don’t worry about who’s paying for any of it.

One of Musk’s very best friends in government is the venerable John McCain. Every time McCain makes a move in the space industry, you can expect to see SpaceX as the beneficiary. Why would that be? Could it be the $10,000 that the SpaceX PAC donated to Senator John McCain this cycle or the $1,780,000 SpaceX spent on lobbying in 2015 of which a large percentage was spent on the National Defense Authorization Act of 2016 that Sen. McCain co-sponsored and was signed into law.

I’m sure that has nothing to do with the fact that McCain is trying to crush SpaceX’s competition.

This week you can watch McCain work his magic in the Senate as he is attempting to pass what is being called the McCain Amendment to the annual defense spending authorization bill. If passed, this bill will essentially guarantee SpaceX is the only vendor to supply as many as 34 rockets to launch satellites for the next 5 years.

The McCain Amendment virtually eliminates the only other competitor, the United Launch Alliance, which is a joint venture between Lockheed Martin and Boeing. They would be eliminated because they buy some of their rockets from Russia. The McCain Amendment won’t allow that. Nobody wants to deal with Russia on security matters, but what if SpaceX can’t deliver the rockets as promised? This bill would make it impossible to go to plan B.

McCain is going to deliver for his friend unless the other members of the Senate stand up for the free market. Being beholden to one supplier for our rockets is a horrible idea. Especially when that supplier has a spotty record of successful launches at best.

This deal is the kind of idea that can leave us launching nothing at all or asking other countries to launch things for us. That will leave America with a much greater security risk than worrying about where we bought some rockets.

McCain is blinded by his association with SpaceX to seeing the real danger he is putting America in. If SpaceX can successfully launch rockets they should have every right to bid on the government contracts, but using friends in high places of government to shut out the competition sounds like crony capitalism to me and will leave America in a dangerous position.

This kind of behavior is the reason most all of America hates politicians and worry about creeping Crony Capitalism.