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Starship development started years before the HLS award and it's mostly funded privately. For all the lofty talk of planetary missions, its real raison d'etre is the satellite game. Starlink is already a very promising business thanks to Falcon 9. The mass-to-orbit revolution promised by Starship would make it an unbelievable money printer.... as far as I know this entire project is currently funded as part of the US moon mission plans. This is taxpayer money being used to try for reusable systems that are currently struggling to be worth reusing, and I don't think the contract cares about that part.
I'm kind of upset that Musk might end up in charge of a government office instead of explaining his rocket company's spending to Congress.
And that launch revolution is - like, it's real and it's inevitable. Even without upper stage reuse, hell, even without booster reuse. The napkin math seems to suggest that Starship is already price competitive with Falcon 9. The current cost estimate for a Starship stack is around 100 million dollars. The same number (internal marginal cost, not sale price) for F9 is around 20 million dollars. That's a price difference of 5:1 for a payload difference of over 10:1, 17 tonnes vs ~200 tonnes. Just by flying the thing, they're already halving the $/kg number. The F9 example would suggest that booster reuse alone will be another reduction of more than 50%.
I am a bit skeptical they'll get economical second-stage reuse anytime soon because yeah, NASA was never able to crack that with Shuttle. It is a hell of a problem. But that doesn't jeopardize the program. HLS should be fine, economically speaking. Even without full reuse, I could see it costing less than a billion per go in the near future. The worst case scenario (let's say every launch is actually 200 million dollars and you need 20 launches to get HLS to the moon) is still somewhat cheaper than SLS + Orion.
There's a reason that even people who can't stand Musk are enraptured by Starship. Mass-producing orbital rockets in the hundreds of tons range really is just an unbelievable gamechanger.