The Bureau of Industry and Security’s (BIS) already modest budget is about to be slashed by $20 million. This comes as the Trump administration appears to be preparing to do so.
Senate Democrats on the Banking Committee and the Appropriations Committee are demanding answers about what they claim is illegal cuts in funding for the BIS that were proposed by the Office of Management and Budget. According to the Appropriations Committee, the reduction in funding was part of the stopgap budget for the continuing resolution passed earlier this month. It was designated as an emergency appropriation for key priorities permitted under the 2023 Fiscal Responsibilities Act.
Both groups of Senators claim that the President does not have the authority to selectively withhold funds for emergency situations. However, he is doing so by cutting $3 billion from a total package worth $12.5 billion. The BIS cuts are only a small part of the total cancellations.
“Cutting off these resources will devastate ongoing national security initiatives that advance our interests across the globe, and I trust Presidents Xi and Putin thank Trump for this latest gift he has delivered them,” Senator Patty Murray, D-WA, vice chair of Appropriations Committee.
BIS is responsible to maintain the US entity list. This is an ever-growing list of foreign companies with which American corporations are prohibited from doing business unless an exception has been granted. The BIS has added 80 entities this week to the list. Many of them are linked to China and have tried to obtain cutting-edge AI components.
Many of the entities added to the list this week were subsidiaries of companies already on the listing. In some cases, it appears that these subsidiaries were created to circumvent the parent company’s sanctions. The BIS’s constant evasion of sanctions and the fact that it is known to do most of its work manually to find and add entities to the list has led to an endless game of whack a mole as Chinese enterprises appear to sidestep sanctions. American suppliers are all too willing to deal with them since there is no law explicitly prohibiting it. In a letter to OMB director Russell Vought [PDF] Banking Democrats led Senator Elizabeth Warren (DMA) stated that the BIS budget is less than $200 million per year. BIS will be negatively affected if the budget is cut by more than 10%. The percentage cut appears to be split between Appropriations Banking, the former stating 10 percent and the latter 12 percent. The Banking Democrats stated
“Despite its relatively modest size, BIS plays an essential role in maintaining our technological and military edge over our adversaries … and it does all of this annually for less than one-sixth the cost of a Patriot missile battery,” .
Warren and her co-authors are concerned that the entity list enforcement would suffer if the allegedly illegal cutbacks were allowed to continue. The letter argues.
- US adds Chinese RISCV player that TSMC suspects of helping build Huawei’s GPUs to the risky company registry
- China will probe US chip subsides as export curbs rumble allies
- US has added web and gaming giant Tencent on the list of Chinese military firms
- Microsoft warned Trump: Where the US doesn’t sell AI technology, China will.
Vought was
Trump’s proposed cancellations of emergency funding requests, along with the $20 million cut from the BIS’ budget, could eliminate $115 millions for State Department programs to disrupt fentanyl exports; $275,000,000 to help foreign allies buy US-made weapons; 300,000,000 to programs investing in supply chains security, digital connectivity and cybersecurity; as well as the entire National Science Foundation budget for equipment and facilities construction. The Senate Appropriations Committee has compiled this list of proposed cuts, as the memo from the OMB to Trump recommending the cuts does not appear to have been published.
“This decision, if not reversed, will wreak havoc at one of our most important national security agencies,” The Banking Democrats wrote.
It is unclear if the proposed funding cuts are formalized. We have asked several sources within the US government for their status but have not heard back. (r)
