“A new golden age” is dawning for science and technology – but the White House is not betting on innovation in institutions.
In a July report from the White House Office of Science and Technology Policy, President Donald Trump and his science and technology adviser Michael Kratsios made it clear that bureaucracy is an enemy to progress in STEM research areas. Instead of spending about $200 billion in annual research and development funds on federal grants, this policy aims to put that money in the hands of individual scientists.
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As Kratsios argued, “Our research enterprise serves, to a large extent, itself and not the scientists within it.” As a solution, this report highlights the redirection of funds to individual scientists and AI researchers to “free them from the growing administrative burden that now consumes almost half of their working time.”
To make this happen, the White House mentioned that it would use its $200 billion toward “alternative pathways beyond traditional academia,” such as more “portable graduate fellowships” and “long-term grants” similar to the Pioneer Award from the director of the National Institutes of Health (NIH).
In addition to supporting human researchers, the White House is also pushing to use these funds as part of the AI-focused Genesis mission. Announced in 2025 under the direction of the Department of Energy, the overall goal of this project is to “integrate supercomputers, AI models, scientific instruments, and datasets into national laboratories to double the productivity and impact of U.S. science within a decade.”
Keeping China’s AI engine under control
The White House report does not hide the fact that these funding shifts are partly due to concerns about Beijing’s exploding AI budget.
In the section “In a Time of Urgent Scientific Need,” a graph of gross domestic spending on research and development showed that China’s spending is now virtually comparable to that of the United States
But it’s not just the high expenses that are unsettling many in the American AI sector. China is pursuing a fundamentally different approach that appears to give it an advantage: open source models.
As Business Insider reported, China’s President Xi Jinping is actively promoting this practice, saying, “We should seize this rare, historic opportunity to promote open source, openness, collaboration and exchange.”
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And recent statistics show that users of China’s LLMs are gobbling up tokens at a remarkable pace. On OpenRouter’s AI leaderboard, Chinese LLMs such as Tencent’s Hy3, Xiaomi’s MiMo, and DeepSeek now have some of the highest weekly token usage rates. The same ranking also shows that DeepSeek has about 20% of the market share for text queries, second only to Google.
Statistics like these have some in Silicon Valley wondering about America’s AI dominance. For example, the co-founder of the startup alphaXiv Rehaan Ahmad said The New York Times He says, “This is still America’s race to lose.” But at the same time he warned that “it’s damn close.”
Read more: 7 Top Habits of “Quietly Wealthy” Americans. How many do you follow?
Will individual funding hinder STEM subjects?
While the White House’s goals and concerns about competition are understandable, not everyone agrees that bypassing bureaucracy is the key to unlocking America’s AI potential.
The Association of American Universities (AAU) actually takes the opposite view.
A recent press release from AAU noted that reduced federal funding is linked to a decline in doctoral programs. According to the AAU, leading American research universities welcomed 15% fewer applicants to their doctoral programs in fall 2026 compared to the previous year. And this isn’t a one-time phenomenon – there was a similar decline in enrollment statistics from 2024 to 2025.
Interestingly, the AAU pointed to the same threat that the White House sees in competition from China. But it says reduced federal funding for universities puts America in a more vulnerable position.
As the AAU noted, “A shrinking doctoral student roster, particularly in STEM fields, means a smaller number of innovators, fewer future scientific and medical breakthroughs, and a reduced ability of the United States to compete with China and other nations in an increasingly knowledge-based global economy.”
MoneyWise reached out to the AAU for further comment, but we did not receive a response at the time of publication.
Data from Business for Federal Research Funding (BFRF) supports the assertion that federal funding for research and development has been a boon to the economy for much of the past few decades. According to the BFRF’s findings, the economic return on state-funded research and development since the Second World War has been 140 to 210% nationwide.
However, given recent cuts and uncertainties surrounding federal funding, BFRF found that the majority of graduate science programs in the U.S. reduced their admissions programs by as much as 60% to 75%.
While it is uncertain whether the White House’s individual-focused funding will bear fruit, universities are clearly preparing for more problems.
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This article originally appeared on Moneywise.com under the title: Trump is siphoning billions in research funding from American universities – and giving it to AI and scientists instead
This article is for informational purposes only and should not be construed as advice. The provision is made without any guarantee.
https://finance.yahoo.com/technology/ai/articles/trump-pulling-billions-research-money-203000932.html
