Trump is pulling billions in research money out of America's universities — and handing it to AI and individual scientists instead

As Kratsios argued, “Too much of our research enterprise has come to serve itself rather than the scientists within it.” As a solution, this report emphasized redirecting funds to individual scientists and AI researchers to “free them from the growing administrative burdens that now weigh them down for nearly half their working hours.”

To make this a reality, the White House mentioned using its $200 billion in “alternative pathways beyond standard academia,” such as more “portable graduate fellowships” and “long-horizon grants” similar to the National Institutes of Health (NIH) Director’s Pioneer Award.

Aside from helping human researchers, The White House is also pushing to use these funds as part of the AI-focused Genesis Mission. Announced in 2025 and under the Department of Energy’s direction, the overarching aim of this project is “integrating supercomputers, AI models, scientific instruments, and datasets across national laboratories to double the productivity and impact of U.S. science within a decade.”

Keeping China’s AI engine in check

The White House’s report doesn’t hide the fact that these funding shifts are partially driven by anxiety over Beijing’s ballooning AI budget.

In the section “At a Time of Urgent Scientific Need,” a graph of gross domestic expenditure on R&D showed that China’s spending is now virtually tied with the U.S.

But it’s not just the high spending that has many in America’s AI sector spooked. China is taking a fundamentally different approach that appears to be giving it an edge: open-source models.

As Business Insider reported, China’s President Xi Jinping is actively promoting this method, saying, “We should seize this rare, historic opportunity to encourage open-source, openness, collaboration, and sharing.”

And recent stats show users of China’s LLMs are gobbling up tokens at a remarkable rate. On OpenRouter’s AI leaderboard, Chinese LLMs like Tencent’s Hy3, Xiaomi’s MiMo and DeepSeek now have some of the highest weekly token usage rates. The same leaderboard also shows DeepSeek has roughly 20% of the text request market share, second only to Google.

Those kinds of stats have some in Silicon Valley wondering about America’s AI dominance. For instance, co-founder of the startup alphaXiv Rehaan Ahmad told The New York Times he thinks, “this is still the U.S.’s race to lose.” But at the same time, he cautioned that “it is getting damn close.”

Will individual funding stymie STEM?

​While the White House’s goals and concerns over 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 argues the opposite.

A recent AAU press release suggested the lower federal funding correlates with a plunge in PhD programs. According to the AAU, leading American research universities welcomed 15% less applicants to their doctoral programs in the fall of 2026 versus last year. And this isn’t a one-off phenomenon — there was a similar decline in the 2024 to 2025 enrollment stats.

Interestingly, the AAU pointed out the same threat the White House sees with competition from China. However, it says lower federal funding to universities puts America in a more vulnerable position.​

As the AAU noted, “A shrinking doctoral pipeline, especially in STEM fields, means a thinner bench of innovators, fewer future scientific and medical breakthroughs, and a diminished capacity for the United States to compete against China and other nations in an increasingly knowledge-driven global economy.”