Dems dub Trump cuts to chip export controls a ‘gift’ to Xi and Putin

Keeping critical tech out of the hands of US adversaries is about to get harder for the Bureau of Industry and Security (BIS) with the Trump administration seemingly poised to slash its already meager budget by $20 million.

Senate Democrats on the Banking and Appropriations committees are demanding answers for what they claim are illegal cuts to funding for the BIS proposed by the Office of Management and Budget (OMB).

The reduction in funding, part of the stopgap continuing resolution budget passed earlier this month, was designated as emergency appropriations for key priorities allowed under the 2023 Fiscal Responsibility Act, according to the Appropriations Committee. 

According to both groups of Senators, the President lacks authority to selectively withhold emergency funds, but is doing just that by slashing $3 billion in emergency appropriations from a total package of $12.5 billion, with the BIS cuts only a small portion 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,” said Senator Patty Murray (D-WA), vice chair of the Appropriations Committee.

The BIS is responsible for maintaining the US entity list, an ever-growing index of foreign companies that American corporations are banned from doing business with unless granted an exception. Just this week, the BIS added some 80 entities to the list, many linked to China, that have attempted to get their hands on cutting-edge AI and supercomputing components.

Several of the entities named in this week’s additions were subsidiaries of organizations already on the list, which in some instances appear to have been spun up to subvert their parent company’s bans. The constant dodging of sanctions, coupled with the fact that the BIS is known to do much of its work to find and add companies to the entity list manually, has led to a perpetual game of whack-a-mole as Chinese enterprises pop up to sidestep sanctions, which American suppliers appear all too willing to do business with since no law explicitly prohibits it.

In a letter [PDF] to OMB director Russell Vought, Banking Democrats led by Senator Elizabeth Warren (D-MA) said the BIS has an annual budget of less than $200 million. Cutting more than 10 percent of that will necessarily impact BIS’s work. Appropriations and Banking appear split on the percentage of the cut, with the former saying it’s 10 percent and the latter saying 12 percent.

“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,” the Banking Democrats said.

If the allegedly illegal cuts are allowed to go forward, Warren and her fellow authors worry that entity list enforcement will suffer.

“This decision will impair essential enforcement activities, embolden our adversaries, endanger American lives and the freedom and safety of individuals living under oppressive regimes, and weaken global security and stability,” the letter argues.

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The Banking Committee has demanded a number of answers from Vought by today, March 27, including an explanation of the legal rationale for selectively withholding emergency funding, and an assessment of how the cut is likely to affect BIS.

Along with the $20 million being cut from the BIS budget, Trump’s proposed cancellation of emergency funding requests could eliminate $115 million for State Department fentanyl trade disruption programs; $275 million designated to help foreign allies purchase US-made weapons; $300 million to programs investing in supply chain security, digital connectivity, and cybersecurity; and the entire National Science Foundation’s equipment and facilities construction budget. This list of proposed cuts is according to the Senate Appropriations Committee as the memorandum from the OMB to Trump proposing the cuts doesn’t appear to have been made public.

“This decision, if not reversed, will wreak havoc at one of our most important national security agencies,” the Banking Democrats wrote.

Whether the proposed funding cuts have been formalized is unclear. We’ve asked several sources in the US government about their status, but haven’t heard back. ®