Arvind Krishna, CEO of IBM, like many tech leaders, thinks AI and associated fields should receive more funding from the federal government, not less.
Why Federal Funding for AI is Crucial
Krishna noted that the federal R&D budget is currently subsidized at close to historical lows relative to the GDP. He pointed out that sheer spending is crucial for fostering growth and healthy competition, not to mention the development of technologies necessary to secure the future of the nation. “We consider that [federal R&D funding] right now [is] happening at close to historic lows in terms of percentage of GDP,” asserted Krishna. “The economic growth, the competitiveness of the United States, and also in investing in many technologies that are essential for our future is aided greatly from more federally funded R&D.”
Trump’s administration has aggressively sought to limit federal discretionary grant spending and scientific inquiry funding as a radical shift from past administrations.
TIP, the primary federal research center for AI, has recently suffered from drastic budget cuts. At the same time, untold numbers of NIST and NSF employees, ASTSupported TIP, seem to be on the verge of mass layoffs.
In 2023, the Trump administration laid out plans to curb spending under the guise of “wokeness”. The NSF as one of many targets was projected to lose more than half of is spending, which would deeply impact AI research and healthcare funded by other federal departments like the NIH and DOE.
Cutting down on funding isn’t new to Trump’s policies, promising the abolishment of the CHIPS Act that aimed to boost manufacturing of semiconductors and specialty chips for AI the Biden administration proposed. Initially, these funds were allocated towards improving the domestic tech workforce, which was almost entirely shredded in March.
Many advocate groups from the tech sector like the Software and Information Industry Association, are actively opposing these cuts, appealing to the White House AI Councillor David Sacks and Commerce Secretary Howard Lutnick, assisting national competitiveness in AI. The government’s Joint Economic Committee states that funded research greatly benefitted the US economy, boasting 25% to 40% ROI compared to top-tier VC funds, which are only able to achieve 15% to 27%.
“We consider that [federal R&D funding] right now [is] happening at close to historic lows in terms of percentage of GDP,” Krishna stated in an interview with TechCrunch. “And it is well understood that more federally funded R&D has an incredibly positive effect on GDP, economic growth, on the competitiveness of the United States, and also in investing in many technologies that are essential for our future.”
The company expressed its frustration with the government’s spending cuts. IBM’s Consulting Division reported a number of contract cancellations during its Q1 earnings call in April, revealing that 15 federal contracts had been terminated, leading to a loss of $100 million in prospective payouts. Between 5% and slightly less than 10% of IBM’s consulting practice derives revenue from federal contracts.
Krishna, who pointed out the federal funding is a small fraction of IBM’s business, also said that his “optimistic” view relies on the concern that the government focuses on increasing R&D spending in the next year.
“I will tell you I expect that in a year … we are going to see better prospects, more federally funded R&D for AI, for quantum, for semiconductors…so let’s put it this way: It is reasonable to expect it to be in as good or in a better shape than it is today,” he said.
Looking Ahead
Krishna stays positive that the government will appropriately rethink its strategy with respect to the need for federal R&D funding. “I will tell you I expect that in a year… federally funded R&D for AI, for quantum, for semiconductors — I expect it to be in as good or in a better shape than it is today,” he expressed.
With the ongoing tussle over whether to fund AI on a federal level or not, Krishna and other industry stakeholders emphasize the continued funding requirement for the United States to retain its prime position in global technology leadership.
