Trump's Blustering About Air Force One Is a Bunch of Hot Air

Yesterday Trump called for the cancellation of the order of the new 747-8 to replace Air Force One. This is an uninformed and reckless proposition, likely colored by Trump’s own suspect track record with his 757, and posturing both politically, and to negotiate with Boeing.

Let’s start with where Trump is coming from. Trump has several private aircraft in his fleet and in 2011 he bought a 757-200 from Paul Allen, cofounder of Microsoft and owner of the Seattle Seahawks. The 757 was already in a VIP configuration and while Trump claimed he “gutted it” and replaced everything, he didn’t change a single thing in the layout of the aircraft or the high-end entertainment system that Paul Allen already had installed. All he really did was put new carpets in, recover the chairs with new leather, have all the metal gold plated, and paint a big T on the tail. The company that did the work is called Stambaugh Aviation in Georgia, a tiny aircraft maintenance provider equivalent to taking your car to your cousin Hector who works on cars on the side out of his parent’s garage.

Trump claims his 757 is worth $100m. That’s like me saying my 2008 Buick is worth its original list price of $38k (instead of the $12k it’s actually worth in 2016) because my cousin Hector put really shiny rims on it, glued rhinestones to the steering wheel, and painted a giant T on the driver’s door.  

The mission profile of Trump’s 757 is to deliver Trump and his entourage from Trump’s golf course on one side of the world to his hotel on the other side with the maximum amount of ostentatiousness possible. Air Force One’s mission is very different. The presidential aircraft is designed to be the safest possible mode of travel for the president, and to essentially replace the white house in case of war or catastrophe. It also transports the president, his entourage, and the media wherever the president goes.

Being able to run the country from the air (essentially indefinitely with aerial refueling) while in the midst of nuclear war is a big task that requires extremely sophisticated technology and doing things that have never been done before. For instance, hardening of electronics against radiation means that the already expensive avionics normally used in aviation can’t be used, and a hardened version must be developed. Add to that the communications equipment, defensive countermeasures, and whatever other classified things Air Force One can do, and you’ve got a big price tag.

The list price of the 747-8i is $378.5m. Add to that a custom VIP interior for about $100m, and you’re at $478.5m per aircraft before you’ve added the expensive communication and defensive modifications. These numbers seem large, but they’re not exaggerated. Over a dozen 747-400 aircraft are in service as VIP transports, and 8 of the new 747-8 aircraft have been sold as VIP transport. These are the costs to complete a 4,786 square foot flying fortress that transports VIPs (which certainly isn’t smaller than the 1,299 square feet in a 757 as Trump has stated).

When Obama initially started the process to replace the 1990s era 747-400s that current serve as Air Force One, the proposal was for four new aircraft. The current proposal is for 3 aircraft and the latest reports put the budget at $2.7b or $900m each which budgets $400m for the hardened communications and defensive countermeasures for each plane.

So, sure Trump, you could do this a lot cheaper. You could buy a new 747-8 for $378.5m and take it to cousin Hector and have a cut-rate interior put in for $75m and be at $453.5m per aircraft. But then all you could do on the plane is watch Netflix and Skype over the wifi, but you wouldn’t be able to lead the free world when it needs leadership the most.

What’s really happening here is posturing by Trump by putting a crazy idea out there to cancel the program in order to set the bounds of the negotiation as broad as possible so he can negotiate a better deal. What will really happen is Trump will talk to the Air Force who will tell him about the mission requirements and what they’re asking Boeing to do and he’ll understand that most of it is actually needed. He probably already understands, but he’s posturing and needs Boeing to think he’s willing to axe the whole program. Then Trump will say they don’t need to be able to shoot satellites out of space from Air Force One, and the price will drop from $900m each to $800m each. Then he’ll order two instead of three, which actually makes sense, and the final price tag will be $1.6b instead of the $2.7b in the current budget (or the $4b number Trump just made up out of thin air). Then he’ll claim he slashed the budget by 60% (again compared to his made-up number) when he really just huffed and puffed and ordered one less spare plane.

Welcome to the Solar Future - Some Assembly Required

Elon Musk's announcement last week from Wisteria Lane of solar roof tiles completed his trifecta of the building blocks of a sustainable future. This future is compelling. You start with these great-looking solar tiles that generate electricity from the sun, and selling any excess power you generate back to the power company. You store a day to a week's worth of your free electricity in a Tesla powerwall in your garage to use after the sun goes down, and you use that same free power to charge your affordable new Tesla model 3.

So, with the launch of Solar City's solar tiles, the solar trifecta of generating electricity, powering your home, and powering your transportation is complete. I am excited about this new future. I drive an 8 year old Sonata which is a good car, but I could picture myself cruising to work in a Tesla model 3 zipping past gas stations while laughing at the luddites pumping gas into their cars who haven't come to the future yet. Even more exciting is knowing that Teslas are equipped with the hardware to drive themselves when the software and regulations are ready for prime time. One day I could be zipping to work from the back seat of my Tesla while it drives me to work, and while I'm working, my Tesla is out working as a part of Uber's fleet bringing in some side revenue, and it arrives at my office just in time to take me home.

I'm also excited about the prospect off generating my own electricity and being independent from the grid. After spending a summer in Phoenix and paying over $400 a month in the summer for the electricity to stay cool, having no power bill, or being paid by the power company would be a welcome treat.

The least exciting of the three parts of the trifecta for me is the powerwall, but it's actually the one of the three I might buy first. The powerwall would allow me to store electricity to run my entire house and charge my car. It also allows independence from the electric company because the power can be used in case of an outage. This would replace my current gas generator as my backup plan for a power outage. It would also solve my problem of not being able to store a sufficient amount of gasoline to make the gas generator very useful for an extended outage situation. Most municipalities limit gasoline storage to 20 gallons or so, and gas doesn't store well even with stabilizers added to it. So for years I've been rotating my handful of 5 gallon gas cans into my gas tank as often as I remember to do it (every year or so). The powerwall solves all those problems because it's a giant battery that can power an entire house. There's nothing else to store, and when combined with the solar tiles, it magically recharges itself every day.

Another great feature in a hot climate would be to store energy in the powerwall during off-peak hours, then use that power during the peak times when electricity costs 3 to 4 times as much. This could save hundreds of dollars a month during a Phoenix summer.

So, with all these benefits (not to mention saving the world by cutting down on fossil fuel use), why haven't I put the $1,000 down for a Tesla Model 3, had a powerwall installed in my garage, and signed up a contractor to install a solar roof? The simple answer is my return on investment. ROI is a common term in the investing world, but it applies to personal finance as well. In this situation, I'm referring to comparing the incremental savings I would enjoy to the cost of joining Elon Musk's solar-powered future.

The costs are pretty steep. To go all in with the trifecta, you need a Tesla Model 3 which starts at $30k. I've never bought a new car off the lot and I'm not sure I ever will. The first few years of depreciation are just too painful for me. The most I've ever paid for a car was $13k for a 7 year old Buick Enclave. A decade or more ago, I used to be an early adopter. I was always scheming how to get the newest gadget. I got the first Android phone the day before it launched, but now phones have progressed so much, I don't get too excited and I'm usually a generation behind the latest and greatest because let's face it, a phone that's a year or two old is still pretty amazing. While I still love technology, I'm more of a bargain shopper than an early adopter in these days of raising a family.

But for the sake of this ROI analysis, let's assume I'm willing to throw down $30k for the entry level Model 3. The next piece is the solar roof. While pricing hasn't been released yet, a Solar City executive said something regarding pricing that the tiles would not be much more expensive than traditional roofing tiles, but those can vary widely in cost of materials from $7k to $70k based on the size and other characteristics of the roof. I think it's safe to pick a number in the middle for an average house so let's call it $35k for a solar roof, plus I'm sure an extra $10k for the installation labor so roughly $45k for the whole solar roof.

Last, let's take the Tesla's 14 kWh powerwall 2. The powerwall sells for $5,500 plus $1,000 for installation. Tesla's handy estimator puts my 5 bedroom house at an estimated 50 kWh usage per day. So, I'd need 4 powerwalls installed to handle a power outage or to run an AC unit all night through the summer before the batteries recharge in the morning. That comes to a total of $23k.

So, the price tag for joining the future is $30k for the car, $45k for the solar roof, and $23k for the batteries for a grand total of $98k. Nearly six figures to join the future.

Now, let's look at the cost savings. Putting no gas in my car would be so satisfying especially when the summer driving season kicks in and the prices go up. Let's say I fill my car up once a week for $40 (I'm closer to $30 with gas just above $2 per gallon). That's $160 a month I could save in gas or $1,920 annually. Let's also look at electricity, assuming my solar roof generates enough power, and the powerwalls store enough power to completely unplug from the power company, I'd be saving about $200 a month on electricity or $2,400 annually. So, that's $4,320 a year I could save in the brave new solar future.

However, when you divide my $4,320 annual savings by my $98,000 initial investment, I'd be 22.6 years down the road before I'd see a positive return on my investment. Given that people own homes for 7 years on average, I'd probably move and wear out my Model 3 before I got close to seeing a return of my investment.

That's not to say I'm only going to go for the best value. I value the environment and I see the end of fossil fuels in our lifetimes. But I can't stomach the cost of joining the future right now. I am really excited the pieces are being put in place for the time I'm ready to make the jump.

I'm also a bit concerned about putting a giant lithium ion battery pack in my garage and in the floor of my car. Lithium ion batteries are a big step forward from the nickel cadmium batteries that proceeded them in terms of energy density, but they are prone to thermal runaway (catching on fire) which is a bad thing to have happen to your car (my wife has been there), or your garage. The laundry list of lithium ion battery caused fires gets longer each year with the current FAA ban on the Samsung Note 7, hoverboards the Christmas of 2015, the Boeing 787, and Sony-manufactured laptop batteries a few years ago. Even Tesla has had trouble with battery fires following accidents in Tesla Model S cars. Boeing's engineers weren't able to pin down which of 3 possible causes of thermal runaway caused the fires on the 787, so they fixed all 3.

But still, I've got a little uneasiness about bringing huge piles of potentially flammable batteries into my car and home and giving them a thorough workout every day. Yes, we have flammable gasoline powering our cars and natural gas powering our homes, but we also have a century of practice safely dealing with those substances and we know how to handle them. Storing that much energy in batteries in my home, I can't help but think of the gasoline fight in Zoolander. I'd feel a little more comfortable if someone else had the trifecta running in their homes with no incidents for years before I take the plunge.

A scenario that might be enough to push me into this amazing future a few years down the road is when the technology has matured and become cheaper and safer. Let's assume that in 5 or 10 years there are better, cheaper, and less flammable aluminum-based batteries to replace lithium ion. This leads to a cheaper electric car ($20k), cheaper powerwalls ($11k) and I'm building a new house so I can install a solar roof for just the incremental price increase over traditional tiles ($20k). Now at $51k out of pocket to join the solar future, I'm much more likely to make the jump with an 11.8 year ROI.

The question in my mind right now isn't if a solar powered life is in my future, it's when will I make the jump? I'm hoping the market makes that sooner rather than later for me.

Cutting the Cord - Overview

Cutting the cord is something many have considered when staring at their ever-increasing cable or satellite TV bills. Although cable's offerings have been getting better and we can now get DVRs that can record 6 shows at once, when you do the math of the number of channels you're paying for vs. the enjoyment you get out of the few you're interested in, it increasingly doesn't add up. I cut the cord back in 2008 and I've worked my way through the many reasons that made me hesitate. The top reasons people don't cut the cord are:

1. I want to get my local channels
2. I want to see live sports
3. I want to see show x on channel x
4. I want clear HDTV
5. I want a DVR
6. I love burning piles of money every month

Here are some solutions to each of those:

1. I want to get my local channels - You can still get your local channels for free over the air. In the leadup to the US transition from analog to digital TV in 2009, many people signed up for cable to make sure they could still get TV. They may have missed the fact that all those local channels are still available over the air in full HD (1080i) for free using an antenna. Sling TV is a viable option here as well which is essentially a barebones cable offering that only streams content and runs $20 a month. However, your mileage may vary with local channels only available in select metro areas.
2. I want to see live sports - You can still catch lots of sports without cable. Local channels will carry many of your local teams' games. You can also stream a large variety of sports on WatchESPN. If your internet provider is a cable company (e.g. Comcast, Time Warner, Cox), you can generally stream a huge amount of live and replay sports via WatchESPN. Also, many pro leagues now offer a season pass that you can pay for separately and stream any game you want. Sling has a few sports options, but not ESPN which is a big gap in their lineup.
3. I want to see show x on channel x - This is where Netflix, Amazon Prime, Hulu, and networks' websites are really helpful. Many popular shows are available to stream through one or more of those sources. Each of those streaming services run roughly $10 a month which is a far cry from the cheapest cable packages available. This is also where Sling comes in, HGTV and other popular channels are available.
4. I want clear HDTV - This is the easiest one of all. Over the air ATSC digital TV transmissions are in full beautiful HD. Most streaming services stream in nice, clear HD.
5. I want a DVR - Yes, the cable company's DVR is slick and easy, but there are some great options out there. My personal favorite is using a small computer as a DVR. There's also some other DVR options like TiVo, but TiVo comes with a monthly subscription for programming guides, that you can get for free with a PC running windows media center.
6. I love burning piles of money every month - Sorry, I can't help you there.

So, to get all this stuff to work to replace cable TV's functionality, you'll need some technology. Stay tuned for future posts with details on:

• Antennas
• DVRs and Microsoft Media Center
• cable companies and streaming ESPN
• streaming from network sites
• review of sling