With $5 billion from the taxpayers in my pocket, I could be a robber baron industrial mogul too. Billionaire Elon Musk prances around as the CEO or godfather of Tesla Motor Company manufacturing electrical cars, Solar City manufacturing solar panels to make electricity, and SpaceX manufacturing space rockets to launch satellites into orbit.
These companies are so cutting edge that they still rarely make a profit. How do they stay in business? With a stream of $5 billion in taxpayer funds.
With $5 billion from the taxpayers, I could be John D. Rockefeller, J.P. Morgan, and Andrew Carnegie myself. But those famous industrialists and financiers made huge fortunes on their own. They weren’t kept in business by a steady stream of taxpayer funds.
But a recent Los Angeles Times investigation concluded that Elon Musk’s companies have benefited from $4.9 billion in taxpayer support. That has come through government grants, discounted loans, environmental credits that Tesla can sell, tax credits and rebates to buyers of his electrical cars and solar panels, and other tax benefits. That doesn’t include government contracts, which are not supposed to involve taxpayer subsidies, but payments for services rendered.
But in two attempts to launch a rocket, SpaceX has failed to get off the ground. The rockets have blown up on the attempted launch, or while on the launching pad. Taxpayers lost not only launch costs, but also over $100 million in satellites and other equipment on board headed for space orbit.
Now Elon Musk wants to follow his boyhood dream to go to Mars. That dream currently includes sending a million earthlings there on SpaceX rockets at a current cost of $10 billion for each colonizer, to build a permanent city on the Red Planet. Musk puts up the bold, inspired vision. And taxpayers put up the cold, hard cash, in a proposed “public-private partnership.”
But if SpaceX can’t even get off the ground, how is it supposed to get to Mars? When the last scheduled SpaceX launch mysteriously blew up on the launching pad on September 1, destroying a $700 million dollar Israeli communications satellite it was supposed to launch into orbit, Musk tweeted that SpaceX could not rule out that the explosion was caused by a UFO.
Contracts with SpaceX do involve a form of government favoritism. The competitor to SpaceX is United Launch Alliance (ULA), a joint venture of top defense contractors Lockheed Martin and Boeing. In 10 years of operation, ULA does not have a single failed launch.
SpaceX can argue it charges less to launch satellites into orbit. But is that really counting the costs of SpaceX’s launch failures, in terms of lost equipment and resulting delays? Or the costs of cleaning up the resulting mess? And how do we count the potential of future lost lives of astronauts, given SpaceX’s record? Not to mention the lives of those million Mars colonizers.
Then there is the bad blood SpaceX seems to have with space aliens. Lockheed Martin and Boeing are not dogged by any such War of the Worlds.
Musk’s fantasy talk of going to Mars is just distracting from more down to earth Musk troubles and failures. Tesla is blowing through cash racing to complete a cutting edge battery factory in the Nevada desert for its mass market Model 3 electric vehicles it is supposed to be ready to sell next year.
Musk’s proposed merger between Tesla and debt laden Solar City is troubled because he is on both sides of the transaction as CEO of Tesla and Chairman and largest shareholder of Solar City. Short seller and financier Jim Chanos called the proposed $2 billion all-stock transaction a “walking insolvency” in Bloomberg Technology. That brings to mind other “alternative energy” failures such as Solyndra and Fisker Automotive, which each cost taxpayers over half a billion.
Is Musk building his own House of Cards paper empire that will only similarly crash and burn the taxpayers once again?
Peter Ferrara is Principal and General Counsel of the Raddington Group, an international economics consulting firm, and Senior Fellow of the Heartland Institute and the National Taxpayers Limitation Foundation. He formerly served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.