SpaceX Will Be the Next Solyndra Disaster if Government Holds Space Privatization Back


This week, SpaceX is scheduled to make its much-anticipated launch to the International Space Station. This embodies the growing role of the private sector in space travel. While the government is scaling back its financial support of space exploration; private companies like SpaceX are picking up where NASA left off.

Privatizing space exploration is a step in the right direction, but there are better ways to go about it than public-private partnerships. Policymakers should take steps to ensure that the space industry doesn't repeat the wasteful mistakes of the renewable energy industry.

The problem is that space travel is not completely privatized. Problems arise when business and government are in bed together. Taxpayers end up shouldering all the risk, and they are stuck with the bill for the project. If all goes well, favored businesses win; if it goes poorly, taxpayers lose. Public-private partnerships open up an opportunity for special interests to take control. Government officials could give lucrative handouts to their friends’ space energy firms.

If you have doubts this could happen, look no further than Obama's green energy plan, where this practice is rampant. The Obama administration has structured its energy policy on giving big handouts to its close friends and passing risk onto taxpayers. According to research by Hoover Institute fellow Peter Schweizer, the Department of Energy provided $20.5 billion in green energy loans in 2009, and about 80% of it went to companies whose chief executive or leading investor was a fundraiser for the Obama campaign.

The same thing could happen to the space industry. In the budget he submitted to Congress in February, President Obama allocated $829 million to develop commercial flights to the International Space Station. NASA now wants to delegate space research to the private sector and has channeled $270 million to private companies. This presents a prime opportunity for cronyism; the Obama administration could award this money to its close friends and special interests.

Plus, the government already bequeaths hundreds of millions of taxpayer dollars on these companies. Space X secured a $1.6 billion contract for 12 flights to the International Space Program. Of course, this amount pales in comparison to other government companies. Consider Boeing — in 2011 alone, the Export-Import Bank provided more than $11.4 billion in loans and long-term guarantees to foreign airlines to buy Boeing airplanes. Does this company really need more financial help from the federal government?  

Ideally, the line item for space exploration would be eliminated entirely from the federal budget, and the private sector would be responsible. As a second best option, the federal government could sponsor contests for innovation in space travel, and entrepreneurs would compete for a prize. This strategy would still encourage the development of new technology, but it would shift the risk from taxpayers to the businesses themselves.

Americans deserve a government that spends their tax dollars wisely. If policymakers were serious about reducing the amount government spends on the space travel, then they should privatize it fully, not just partner with the private sector.