It’s no secret that DOGE cuts in the federal government have thrown a wrench into both hiring and day to day operations. What’s particularly concerning is that with cuts to the National Science Foundation (NSF), there is a very good chance that AI development is going to be scaled back considerably.
Just after Inauguration Day, the National Science Foundation fired close to 10% of its full time staff. Comparable cuts were made in other federal agencies, though the NSF cuts are particularly troubling since they oversee billions of dollars in grant money and most employees are relatively easily employable elsewhere. These fired employees will likely not be coming back to the federal government for work. Even if funding were restored tomorrow, it would likely take at least a year to fully train new employees.
The organization that may be in the most danger is the National Artificial Intelligence Research Institutes program, formed by the NSF in order to foster ethical AI growth and connect hundreds of AI-research organizations worldwide. Though total 2024 numbers have yet to be released, about $800 million in AI-related grants were issued in the U.S. by the NSF in 2023.
The NSF, through the NAIRI program, helps foster public-private partnerships which ultimately results in nearly all of the grant money going directly to U.S. employees and research institutions. This basically allows for a framework where public research institutions can grow out expansive AI-related programs for relatively little money. The existence of this sort of partnership fosters a lot of private investment in the U.S. Just after his inauguration, Trump touted a planned $500 billion total investment in AI infrastructure in the U.S over the coming years. While the spending has yet to come to fruition (it is still early), China has been plowing forward with new AI-related investments.
While the U.S. focuses on scaling back important AI related work (through the NSF and multiple other agencies), China has done the exact opposite. In January, the Chinese government, through investments vehicles they control, created an $8.2 billion fund specifically for AI investments. This is just below the $9 billion total budget for the NSF. All of this is happening in the midst of a U.S. stock market correction, which will likely further dampen investors’ appetites for R&D related equities.
The U.S., through private investment, does spend more money on AI development than China, for now. However, if these cuts continue and investor confidence keeps eroding, even heavy spending on AI may not be enough to keep the lead in AI development. On top of the raw spending power, it’s still important to get “bang for your buck”, which is more difficult if the NSF’s framework between public and private entities withers away. The same public institutions, mainly universities, are the same places where tomorrow’s AI employees are developed. These institutions must stay in the loop if the U.S. is going to continue to be dominant in the AI field.
