Battle Lines Are Drawn

The first step in the budget decision process was a set of “hearings” at which NASA met with those in OMB and other parts of the Executive Office of the President working on space issues to present the thinking behind NASA’s budget request. The OMB hearings took place on October 6, 7, and 8, with the human space flight program being the focus on October 7. Low led the NASA delegation to the hearings and reported that they were gener­ally positive and friendly in tone. Low told Rice and the OMB staff that at the budget level of approximately $3.2 billion that NASA had requested, the agency’s priorities with respect to human space flight were, in order: flying Skylab, starting shuttle development, flying the Apollo 16 and 17 missions, carrying out a docking mission with a Soviet spacecraft, and adding addi­tional “gap-filler” missions using left-over Apollo hardware. But if NASA were held to a budget less that $3 billion as proposed in the OMB August target, said Low, NASA would give priority to flying the remaining two Apollo missions and would “re-examine what to do about future manned space flight.”1

There was one exception to the collegial tone of the October 7 hearing. William Niskanen, head of the OMB Evaluation Division, made two pro­vocative suggestions. The first was to finance the NASA program through revenues raised by selling the material returned from the Apollo missions to the Moon. The second was to have the private sector, using its own financial resources, develop the next generation space transportation system, and then sell transportation services to NASA and the Department of Defense (DOD) to recoup that investment. The staff of the Evaluation Division was in gen­eral even more skeptical of the value of NASA’s human space flight program than were OMB’s mainline budget examiners, and Niskanen a year earlier had been an opponent of any hint of a commitment to the space shuttle. Niskanen was a student of conservative economist Milton Freidman at the University of Chicago and libertarian in political and economic philosophy, advocating a very limited role for government; this perspective made him an opponent of major new government programs justified on economic grounds.

Reacting to the first of Niskanen’s ideas, the Space Council’s Anders com­mented that “unless the President himself ordered us to consider the selling of lunar material for profit, we should not even discuss the subject because it would be embarrassing to the Administration.” With respect to a commercial shuttle, Low told Niskanen that “the reason for not doing it is that it simply won’t work: if the idea is to cancel the space program, this might be a way to do it.” Whereupon, Low reported, Niskanen and his staff left the room, “but not without making a fairly strong threat about NASA’s budget.”

OMB’s Rice was personally sympathetic to the idea of not going ahead with the shuttle, noting that Niskanen and his group “wanted to kill it, just kill it off,” but that he had “adopted the view fairly early on that while that may well be the desirable thing to do from a broader public interest point of view, I didn’t believe that the President was in fact going to take the country out of manned space flight.” This skeptical perspective would lead Rice in the following weeks to seek the least costly shuttle program possible, putting him in direct opposition to NASA’s insistence that only a large space shuttle made sense. Rice’s background was in the type of systems analysis that had been developed at the Rand Corporation (which he would later head) and applied during the 1960s under Robert McNamara at the DOD; both Rice and Niskanen had worked at DOD then. Rice had pushed NASA to take a “whole systems” approach to evaluating the shuttle and possible alternatives for space transportation in terms of their cost-effectiveness. This approach, with its emphasis on quantitative measures, gave primary importance to eco­nomic factors. NASA’s Fletcher, believing that the primary reason for going ahead with the shuttle was the new capabilities it would offer and the intan­gible values associated with human space flight, was skeptical of a systems analysis approach to evaluating the shuttle, believing that “you can make systems analysis prove anything you want. . . it was just a lot of hocus-pocus,” since it could not assign a quantitative value to those new capabilities or to the value of the shuttle in terms of national prestige and international coop­eration. NASA’s Willis Shapley described Rice as “a strong believer in the religion of systems analysis” who took the shuttle issue on “to prove. . . that you could really get a better decision by really giving this the full systems analysis treatment.” Shapley, himself a long-time Bureau of the Budget staff person before joining NASA, observed that “analysis becomes a weapon in a controversy rather than a search after some abstract kind of truth.”2