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SpaceX did have the government as their major early customer, but they charged less than other vendors of the same services (e.g., Orbital for space station resupply), so it's odd to describe their fees as a "subsidy". That description better fits the "launch capability" fee that ULA charges DOD in addition to the fees (well above commercial launch rates) that ULA charges for the launches themselves.

Quite amazing... why wasn't ULA able to leverage their billions in government subsidies so well?

Elon is doing it wrong. You're supposed to waste government funding, not deliver stuff.

I only half joke. He's threatening a massive gravy train by showing that government really ought to expect more from private contractors. Why didn't ULA do a reusable first stage? They got far more money from government than SpaceX over the years.

Capitalism finally kicking in, where there is waste there is opportunity.

Do you mean the launch contracts or the milestone payments?