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Defense Department Awards Chip Funding to Fuel Domestic Research

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The $238 million in grants will set up eight research hubs, as a small slice of the federal money that will go to chip companies and research facilities in the coming months.The Biden administration on Wednesday announced that it was awarding $238 million through the Defense Department to set up eight hubs around the United States for promoting innovation in the semiconductor industry.The funds are one of the earliest releases of the nearly $53 billion in grants and subsidies that Congress and the Biden administration have approved to build up the domestic semiconductor industry, which U.S. officials say has been left vulnerable by decades of offshoring.The Biden administration has a variety of funding programs in the works to encourage chip research institutions and manufacturers to set up operations in the United States. Most of these programs are run through the Commerce Department, and many will begin handing out money this fall.While U.S. companies still design many of the world’s most advanced chips, much of the manufacturing of the technology has been outsourced to foreign locations, including Taiwan, leaving U.S. chip supply vulnerable if, for example, the Chinese government were to invade Taiwan.The awards announced Wednesday will go to research institutes, consortiums and universities located in New York, Arizona, Indiana, Ohio, California, North Carolina and Massachusetts, defense officials said.Each hub will receive $15 million to $40 million to fund the development of new chips for use in electromagnetic warfare, artificial intelligence, 5G and 6G wireless technologies, and quantum computing, among other areas. While the research will be directed at meeting the needs of the Defense Department, it is also expected to be useful for commercial applications.Kathleen Hicks, the deputy defense secretary, said in a news conference Wednesday that the hubs would “tackle many technical challenges relevant to D.O.D.’s missions, to get the most cutting-edge microchips into systems our troops use every day: ships, planes, tanks, long-range munitions, communications gear, sensors and much more.”The funding also aims to accelerate what the industry refers to as the “lab-to-fab transition,” the process of taking new chip technologies and turning them into viable commercial products.David A. Honey, the deputy under secretary of defense for research and engineering, said the hubs would bring more prototype work to the United States.“Now we’ll be able to get it done here,” he said. “And also we’re building out in the areas that are just not available anywhere else.”The Commerce Department is separately setting up a string of research hubs for the semiconductor industry, collectively called the National Semiconductor Technology Center, drawing on $11 billion in funding it received for research and development.Appearing before the House Science, Space and Technology Committee on Tuesday, Gina Raimondo, the commerce secretary, said that her department was on track to formally unveil that technology center this fall.She also said that the department had received about 100 applications from companies hoping to receive grants that will be available to manufacturers.While Ms. Raimondo acknowledged that the grant program faced challenges, like securing enough workers to staff new chip plants, she said that if properly implemented, the program would make the United States “the premier destination in the world” for chip design, research and manufacturing.“That’s the vision that we’re trying to achieve with your support,” Ms. Raimondo told lawmakers.Ms. Raimondo was also questioned about the release in prior weeks of an advanced smartphone by Chinese telecom giant Huawei. The company is under heavy U.S. trade restrictions, administered by the Commerce Department, that theoretically should have prevented such an innovation.Ms. Raimondo said that she was upset by the development, but added that the U.S. government did not have any evidence that Chinese companies could manufacture the more sophisticated chips at scale.Ms. Raimondo said that the United States could take various defensive measures to limit China’s access to advanced technology, but “my strongly held view is that what we do on offense matters so much more.”“The reality is that over the past 30 years, this country has taken its eye off the ball of manufacturing,” she continued. “And when you don’t manufacture you lose out on innovation, and you become dependent on other countries.” More

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    Military Spending Emerges as Big Dispute in Debt-Limit Talks

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    President Biden has offered to freeze discretionary spending, including for defense. Republicans want to spend more for the military, and cut more elsewhere.Funding for the military has emerged as a key sticking point in reaching an agreement to raise the nation’s borrowing limit and prevent a catastrophic default, with Republicans pushing to spare the Defense Department from spending caps and make deeper cuts to domestic programs like education.President Biden has balked at that demand, pointing to a long series of past budget agreements that either cut or increased military spending in tandem with discretionary programs outside of defense.How the sides resolve that issue will be critical for the final outcome of any debt deal. It remains possible that in order to reach a deal that prevents a default, Democrats will accept an agreement that allows military spending to grow even as nondefense spending falls or stays flat.Mr. Biden’s aides and congressional Republicans deputized by Speaker Kevin McCarthy are trying to negotiate an agreement to lift the borrowing limit before the government runs out of money to pay its bills on time, which could be as soon as June 1. Republicans have refused to raise the limit unless Mr. Biden agrees to cuts in federal spending outside of the military.The talks over spending cuts have narrowed in focus to mostly cover a relatively small corner of the budget — what is known as discretionary spending. That spending is split into two parts. One is money for the military, which the Congressional Budget Office estimates will total $792 billion for the current fiscal year. The other half funds a wide range of domestic programs, like Head Start preschool and college Pell Grants, and federal agencies like the Interior and Energy Departments. It will total $919 billion this year, the budget office estimates.A separate category known as mandatory spending has largely been deemed off limits in the talks. That spending, which is the primary driver of future spending growth, includes programs like Social Security and Medicare.Administration officials have proposed freezing both halves of discretionary spending for next year. That would amount to a budget cut, compared with projected spending, under the way the budget office accounts for spending levels. Spending for both parts of the discretionary budget would be allowed to grow at just 1 percent for the 2025 fiscal year. That could also amount to a budget cut since 1 percent would almost certainly be less than the rate of inflation. That proposal would save about $1 trillion over the span of a decade, compared with current budget office forecasts.Republicans rejected that plan at the bargaining table. They are pushing to cut nondefense spending in actual terms — meaning, spend fewer dollars on it next year than the government spent this year. They also want to allow military spending to continue to grow.“It just sends a bad message and Republicans feel like it would not be in our best interest to cut spending at this juncture, when you’re looking at China and Russia and a lot of instability around the world,” said Representative Robert B. Aderholt, Republican of Alabama, who sits on an Appropriations panel that oversees Pentagon spending. “That’s been the basic position that most Republicans have.”Mr. McCarthy sounded a similar note when speaking to reporters on Thursday. “Look, we’re always looking where we could find savings and others, but we live in a very dangerous world,” he said. He added, “I think the Pentagon has to actually have more resources.”Republicans included 10-year caps on discretionary spending in a bill they passed last month that also raised the debt ceiling through next year, and party leaders said they would exempt the military from those caps. Mr. Biden has vowed to veto the bill if it passes the Senate in its current form, which is unlikely.White House officials have hammered Republicans over concentrating their proposed discretionary savings on domestic programs, saying their bill would gut spending on border enforcement, some veterans’ care, Meals on Wheels for older Americans and a host of other popular programs.“Speaker McCarthy and I have a very different view of who should bear the burden of additional efforts to get our fiscal house in order,” Mr. Biden said on Thursday at the White House. “I don’t believe the whole burden should fall on the backs of the middle class and working-class Americans.”Congressional Democrats, including members of committees that oversee military spending, have attacked Republicans for focusing largely on nondefense programs.“If you’re going to freeze discretionary spending, there’s no reason on earth why defense shouldn’t be part of that conversation,” said Representative Adam Smith of Washington, the top Democrat on the Armed Services Committee. Republicans, he said, “are taking a hostage to advance their very narrow agenda. I’m not a fan of that. That’s not something I’m going to want to support.”Any agreement that increased military spending while freezing or cutting other discretionary spending would break from a budget-deal tradition that dates to 2011, when House Republicans refused to raise the debt limit until President Barack Obama agreed to spending cuts. The deal that avoided default was centered on spending caps that split their reductions evenly between defense and nondefense programs.The push to increase military funding while cutting more heavily elsewhere reflects a divide in the House Republican caucus. It includes a large faction of defense hawks who say the military budget is too small, alongside another large faction of spending hawks who want to significantly shrink the fiscal footprint of the federal government.Mr. McCarthy needs both factions to retain his hold on the speakership, which he narrowly won this year after a marathon week of efforts to secure the votes. And he will need to navigate them both as he tries to pass any debt-limit agreement with Mr. Biden through the House.Catie Edmondson More

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    In a Sharp Reversal, Biden Opens a Path for Ukraine to Get Fighter Jets

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    The president told allied leaders that he would allow Ukrainian pilots to be trained on American-made F-16s, and is prepared to approve other countries’ transferring the jets to Ukraine.President Biden told U.S. allies on Friday that he would allow Ukrainian pilots to be trained on American-made F-16 fighter jets, several U.S. officials said, adding that the president is prepared to let other countries give F-16s to Ukraine — a major upgrade of the Ukrainian military and a sharp reversal.Since Russia launched its full-scale invasion of Ukraine 15 months ago, officials in Kyiv have pleaded for advanced warplanes to overcome Russian air superiority. But Mr. Biden has resisted, concerned that the jets could be used to hit targets deep inside Russia, and prompt the Kremlin to escalate the conflict. Pentagon officials have said that other weapons, especially air defenses, were needed more urgently, and the high cost of the F-16s could squeeze out other matériel.But several European countries that belong to the NATO alliance and have F-16s in their arsenals have called for an international effort to provide the training and transfer of their jets to Ukraine. Doing so would require American permission, because the weapons were first sold to them by the United States. Though not the most advanced U.S. fighter, the F-16 carries powerful radar that can spot targets from hundreds of miles away and modern missiles and other technology that American officials do not want duplicated or falling into hostile hands.Mr. Biden told other leaders of the Group of 7 nations, the world’s wealthiest democracies, of his decision on pilot training, opening a path to supplying Ukraine with fighter jets, at their summit meeting in Hiroshima, Japan, according to several officials who requested anonymity to speak candidly about sensitive deliberations.They said the United States and its allies would discuss in the coming months how to supply Kyiv with the jets themselves, and one senior administration official said the White House was prepared to approve that step. The United States is not expected, at least under current plans, to send its own F-16s.A group of F-16s flying over Washington, in March. Ukraine has said it needs the jets to compete effectively with Russia’s air force.Andrew Caballero-Reynolds/Agence France-Presse — Getty Images“I welcome the historic decision of the United States and @POTUS to support an international fighter jet coalition. This will greatly enhance our army in the sky,” President Volodymyr Zelensky of Ukraine, who is expected to address the Group of 7 this weekend, wrote on Twitter.In a joint statement, the allied leaders said they were committed “to continuing our security assistance to Ukraine as it defends itself against Russia’s aggression, tailoring our support to Ukraine’s needs.” The group vowed to provide “financial, humanitarian, military and diplomatic support Ukraine requires for as long as it takes.”Earlier on Friday, Mr. Zelensky had addressed an Arab League summit in Jeddah, Saudi Arabia, where he challenged the neutral stance many Arab countries have adopted on the war and implored them to help save Ukrainians “from the cages of Russian prisons.” “Unfortunately there are some in the world, and here among you, who turn a blind eye to those cages and illegal annexations,” he said. “I am here so that everyone can take an honest look, no matter how hard the Russians try to influence.”Western officials said Mr. Zelensky planned to travel to Hiroshima this weekend to attend the summit meeting. Ukrainian officials gave conflicting accounts, however, with some saying he would appear in person and others saying he would speak to the leaders by video link. The vagueness appears to reflect security concerns as Mr. Zelensky moves across the globe seeking aid and arms; he was in several European countries last week, as well as Saudi Arabia on Friday.Ukraine is expected to launch a major counteroffensive soon, hoping to retake more territory seized by Russia in the war’s early days. Any delivery of fighter jets would be months away, too late to affect that plan.The Group of 7 leaders in Hiroshima spent much of the day discussing the coming counteroffensive and its chances of forcing Russia to the negotiating table to discuss some form of an armistice that would stop the fighting, even if it did not resolve the central issues of the war.They are also poised to unveil a slew of new sanctions and export controls to clamp down further on the Kremlin’s ability to fund the war, and to crack down on third-party nations that have been secretly providing Russia with banned technologies that can be used in weapons systems.Earlier on Friday, President Volodymyr Zelensky of Ukraine told a gathering of the Arab League not to “turn a blind eye” to the atrocities committed by the Russian forces.Saudi Press Agency/EPA, via ShutterstockThe allies appear determined to demonstrate unified resolve to support Ukraine at a time when President Vladimir V. Putin of Russia seems to be betting that their interest and commitment will wane.Mr. Biden’s changed stance on F-16s is his latest about-face on allowing Ukraine to field advanced weapons, including HIMARS rocket launchers, Patriot air defense missile systems and Abrams tanks. In each case, the president at first refused, only to change his mind under pressure from European allies.Top Pentagon officials have consistently said that they do not believe Ukraine needs F-16s at this stage of the conflict.Celeste A. Wallander, the assistant secretary of defense for international security affairs, told the House Armed Services Committee last month that advanced Western fighter aircraft ranked only “about eighth” on Ukraine’s priority list. She said officials have focused on resources with the “highest priority capabilities, and that has been air defense, artillery and armor.”But the push for F-16s by Ukraine and its supporters in Congress was reinforced this week when Yahoo News reported that an internal U.S. Air Force assessment concluded it would take only four months to train Ukrainian pilots to operate the fighters, a far shorter time frame than Pentagon officials had cited previously.The document, which a senior Air Force official confirmed and said was shared with several NATO allies who fly F-16s, contained a detailed assessment undertaken in late February and early March at Morris Air National Guard Base in Tucson, Ariz. Two Ukrainian pilots were given “no formal training” on the F-16, according to the assessment, other than a brief familiarization, and then were tested on a flight simulator for several hours.A Ukrainian soldier passes a crater caused by Russian bombardment in the village of Heorhiivka in eastern Ukraine. Kyiv says F-16s would greatly increase their forces’ ability to defend against aerial attacks.Finbarr O’Reilly for The New York TimesAn appearance by Mr. Zelensky at the Group of 7 would be a strong rebuff to Mr. Putin and a reminder of how thoroughly relations with Russia have deteriorated. Thirty years ago, President Clinton met with Boris Yeltsin, then the president of Russia, in Japan to begin to map the integration of a post-Soviet Russia into the world economy, as Mr. Clinton promised to seek the repeal of Cold War sanctions. Five years later, Russia joined what became the Group of 8.Now all that has been reversed. After Russia annexed Crimea in 2014, it was suspended from the group, and left it entirely three years later. Russia’s economy is struggling under sanctions imposed since the invasion last year, particularly the price cap on its oil sales, and more are coming.Britain on Friday said it was implementing a ban on Russian diamonds, copper, aluminum and nickel. Australia also said on Friday it was imposing new financial sanctions targeting 21 entities and three individuals, including Russia’s largest gold company, petroleum and steel companies and defense entities.The United States also rolled out a “substantial package” of restrictions, including cutting off 70 more firms from American exports and adding more than 200 individuals and entities to its sanctions list. The measures are meant to crack down on people or companies that are helping Moscow to evade existing sanctions.The fresh round of penalties “will further tighten the vise on Putin’s ability to wage his barbaric invasion and will advance our global efforts to cut off Russian attempts to evade sanctions,” Treasury Secretary Janet L. Yellen said in a statement on Friday.Until now, the Ukraine war has seemed far away from daily life in Moscow, but Russian leaders are growing increasingly nervous about the repercussions of a promised Ukrainian counteroffensive.Natalia Kolesnikova/Agence France-Presse — Getty ImagesThe United States will broaden sanctions to cover more corners of the Russian economy, striking at its avenues to acquire semiconductors and other high-tech goods from Group of 7 nations, which American officials said Friday are critical to Russia’s ability to build weapons. Antony J. Blinken, the secretary of state, said in a release that the new sanctions would take aim at components Russia needs to build a drone that is currently being deployed in Ukraine.The new penalties also seek to squeeze Russia’s ability to drill for oil and gas, and to crimp venture capitalists and financial services firms that American officials said were aiding sanctioned Russian businesses.Goods that Western businesses are now prohibited from selling to Russian buyers often reach them through middlemen — changing hands, legal jurisdictions and free-trade zones multiple times. The trade is hard to track and harder to enforce, especially for “dual use” goods that have both civilian and military applications.With many of Russia’s other revenue streams squeezed by previous rounds of sanctions, officials have homed in on diamonds as a lucrative trade still providing Moscow with funding for its war. Russia is the world’s largest supplier of small diamonds, exporting more than $4.5 billion in 2021, making the gem its top non-energy export by value. More

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    What’s in the CHIPS Act, Aimed at Childcare Expansion and National Security

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    A sprawling new program for the semiconductor industry is foremost about national security, but it will try to advance other priorities as well.The Biden administration unveiled rules Tuesday for its “Chips for America” program to build up semiconductor research and manufacturing in the United States, beginning a new rush toward federal funding in the sector.The Commerce Department has $50 billion to hand out in the form of direct funding, federal loans and loan guarantees. It is one of the largest federal investments in a single industry in decades and highlights deepening concern in Washington about America’s dependence on foreign chips.Given the huge cost of building highly advanced semiconductor facilities, the funding could go fast, and competition for the money has been intense.Here’s a look at the CHIPS and Science Act, what it aims to do and how it will work.Funding chip production and researchThe largest portion of the money— $39 billion — will go to fund the construction of new and expanded manufacturing facilities. Another $11 billion will be distributed later this year to support research into new chip technologies.The bulk of the manufacturing money is likely to go to a few companies that produce the world’s most advanced semiconductors — including Taiwan Semiconductor Manufacturing Company, Samsung Electronics, Micron Technology and, perhaps in the future, Intel — to help them build U.S. facilities.Some will go to makers of older chips that are still essential for cars, appliances and weapons, as well as suppliers of raw materials for the industry and companies that package the chips into their final products.While some critics have questioned the wisdom of giving grants to a profitable industry, semiconductor executives argue that they have little incentive to invest in the United States, given the higher costs of workers and running a factory.The Global Race for Computer ChipsU.S. Industrial Policy: In return for vast subsidies, the Biden administration is asking chip manufacturers to make promises about their workers and finances, including providing affordable child care.Arizona Factory: Internal doubts are mounting at Taiwan Semiconductor Manufacturing Company, the world’s biggest maker of advanced chips, over its investment in a new factory in Phoenix.CHIPS Act: Semiconductor companies, which united to get the sprawling $280 billion bill approved last year, have set off a lobbying frenzy as they argue for more cash than their competitors.A Ramp-Up in Spending: Amid a tech cold war with China, U.S. companies have pledged nearly $200 billion for chip manufacturing projects since early 2020. But the investments have limits.The administration does not plan to fund entire projects: Biden administration officials say they plan to offer grants of between 5 to 15 percent of a company’s capital expenditures for a project, with funding not expected to exceed 35 percent of the cost. Companies can also apply for a tax credit reimbursing them for 25 percent of project construction.Limiting foreign dependenceGina Raimondo, the secretary of commerce, describes the program as foremost a national security initiative.While the United States is still a leader in designing chips, most manufacturing has been sent offshore. Today, more than 90 percent of the most technologically advanced chips, which are critical for the U.S. military and the economy, are produced in Taiwan. That has prompted concerns about the supply’s vulnerability, given China’s aggression toward Taiwan and the potential for a military invasion of the island.At the same time, China has increased its market share in less advanced chips that are still critical for cars, electronics and other products. The United States manufactures 12 percent of chips, though none of the world’s most advanced.Chip shortages during the pandemic forced factories to halt work and brought home in a tangible way how vulnerable the supply chain is to disruption. Workers at Ford Motor factories in Michigan and Indiana worked a full week just three times last year because of a chips shortage, Ms. Raimondo said in a speech at Georgetown University last week. That helped create a car shortage and raise the price of cars, stoking inflation.The Commerce Department says the program will also provide the Department of Defense and the national security community with a domestic source of the world’s most advanced chips.An Intel factory under construction in Arizona. The Biden administration unveiled the rules for its program to build up U.S. semiconductor research and manufacturing.Philip Cheung for The New York TimesBuilding chip hubsAccording to Ms. Raimondo, the goal is to build at least two U.S. manufacturing clusters to produce the most advanced types of logic chips, as well as facilities for other kinds of chips, and complex supply networks to support them.Commerce officials have declined to speculate where these facilities might be, saying they must review applications. But chip makers have already announced billions of dollars in plans for new investments around the United States.TSMC, which produces most of the world’s leading-edge chips, has been busy expanding in Arizona, while No. 2 Samsung is growing in Texas. Micron, which makes advanced memory chips, has announced big expansion plans in New York. And Intel, a U.S. technology giant that is investing heavily to try to capture a technological edge, has broken ground on a “megasite” in Ohio.Ms. Raimondo has said the vision is to restore the United States to a position of leadership in semiconductor technology, to the point where every major global chip company wants to have both research and manufacturing facilities in the United States.Still, there is skepticism about how much the program can do. One 2020 study, for example, found that a $50 billion investment in the industry would increase U.S. market share only to 14 percent.Protecting taxpayer fundsThe stakes are high for the Biden administration to prove this foray into industrial policy can work. Critics have argued that the federal government may not be the best judge of winners and losers. If the administration gets it wrong, it could face intense criticism.The Commerce Department said it would look closely at companies that applied for funding, to try to ensure that they were not being given more taxpayer dollars than they needed.In a decision that may irk some companies, the department said projects receiving grants would be required to share a portion of any unanticipated profits with the federal government, to ensure that companies gave accurate financial projections and didn’t exaggerate costs to get bigger awards.The Commerce Department also said it would dole out funding over time as companies hit project milestones, and give preference to those that pledged to refrain from stock buybacks, which tend to enrich shareholders and corporate executives by increasing a company’s share price.Companies are also barred from making new, high-tech investments in China or other “countries of concern” for at least a decade, to try to ensure that taxpayer money does not go to fund new operations in China.But analysts said it remained to be seen how difficult it would be to enforce these provisions. Company finances can be opaque, and when a company saves a dollar in the United States, it may then choose to invest it elsewhere.Helping workers by attaching big stringsThe program also includes some ambitious and unusual requirements aimed at benefiting the people who will staff semiconductor facilities.For one, the department will require companies seeking awards of $150 million or more to guarantee affordable, high-quality child care for plant construction workers and operators. This could include building company child care centers near construction sites or new plants, paying local child care providers to add capacity at an affordable cost or directly subsidizing workers’ care costs. Ms. Raimondo has said child care will draw more people into the work force, when many businesses are struggling in a tight labor market.Applicants are also required to detail their engagement with labor unions, schools and work force education programs, with preference given to projects that benefit communities and workers.Other provisions will encourage companies, universities and other parties to offer more training for workers, both in advanced sciences and in skills like welding. The department said it would give preference to projects for which state and local governments were providing incentives with “spillover” benefits for communities, like work force training, education investment or infrastructure construction.This is part of the Biden administration’s “worker-centered” approach to economic policy, which seeks to use the might of the federal government to benefit workers. But some critics say it could put the program’s goal of building the most advanced semiconductor factories at risk, if it adds excessive costs to new projects. More

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    Trump Officials Gave Pandemic Loan to Trucking Company Despite Objections

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    WASHINGTON — Democratic lawmakers on Wednesday released a report alleging that top Trump administration officials had awarded a $700 million pandemic relief loan to a struggling trucking company in 2020 over the objections of career officials at the Defense Department.The report, released by the Democratic staff of the House Select Subcommittee on the Coronavirus Crisis, describes the role of corporate lobbyists during the early months of the pandemic in helping to secure government funds as trillions of dollars of relief money were being pumped into the economy. It also suggests that senior officials such as Steven Mnuchin, the former Treasury secretary, and Mark T. Esper, the former defense secretary, intervened to ensure that the trucking company, Yellow Corporation, received special treatment despite concerns about its eligibility to receive relief funds.“Today’s select subcommittee staff report reveals yet another example of the Trump administration disregarding their obligation to be responsible stewards of taxpayer dollars,” Representative James E. Clyburn of South Carolina, the Democratic chairman of the subcommittee, said in a statement. “Political appointees risked hundreds of millions of dollars in public funds against the recommendations of career D.O.D. officials and in clear disregard of provisions of the CARES Act intended to protect national security and American taxpayers.”The $2.2 trillion pandemic relief package that Congress passed in 2020 included a $17 billion pot of money set up by Congress and controlled by the Treasury Department to assist companies that were considered critical to national security. In July 2020, the Treasury Department announced it was giving a $700 million loan to the trucking company YRC Worldwide, which has since changed its name to Yellow.Lobbyists for Yellow had been in close touch with White House officials throughout the loan process and had discussed how the company employs Teamsters as its drivers, according to the report.Mark Meadows, the White House chief of staff, was a “key actor” coordinating with Yellow’s lobbyists, according to correspondences that the committee obtained. The report also noted that the White House’s political operation was “almost giddy” in its effort to assist with the application.The loan raised immediate questions from watchdog groups because of the company’s close ties to the Trump administration and because it had faced years of financial and legal turmoil. The firm had lost more than $100 million in 2019 and was being sued by the Justice Department over claims that it had defrauded the federal government for a seven-year period. It recently agreed to pay $6.85 million to resolve allegations “that they knowingly presented false claims to the U.S. Department of Defense by systematically overcharging for freight carrier services and making false statements to hide their misconduct.”To qualify for a national security loan, a company needed certification by the Defense Department.According to the report, defense officials had recommended against certification because of the accusations that the company had overcharged the government. They also noted that the work that the company had been doing for the federal government — which included shipping meal kits, protective equipment and other supplies to military bases — could be replaced by other trucking firms.But the day after a defense official notified a Treasury official that the company would not be certified, one of Mr. Mnuchin’s aides set up a telephone call between him and Mr. Esper.The report indicated that Mr. Esper was not initially familiar with the status of Yellow’s certification. Before the call, aides prepared a summary of the analysis and recommendations of the department’s career officials that concluded that the certification should be rejected. Before those reached Mr. Esper, Ellen M. Lord, the department’s under secretary for acquisition and sustainment who was appointed by Mr. Trump, intervened and requested a new set of talking points that argued that the company should receive the financial support “to both support force readiness and national economic security.” Ms. Lord could not immediately be reached for comment.After the call with Mr. Mnuchin, Mr. Esper certified that the company was critical to national security, and a week later the approval of the loan was announced.Mr. Mnuchin then sent an email to Mr. Meadows that included news reports praising the loan. He highlighted positive comments from James P. Hoffa, the longtime president of the Teamsters union, who according to documents in the report made a direct plea to President Donald J. Trump about the loan.Mr. Esper and Mr. Mnuchin declined to comment. A former Treasury official familiar with the process said the loan saved 25,000 union jobs during an economic crisis and prevented disruption to the national supply chain that the Defense Department, businesses and consumers had depended on. The former official said that because of the terms of the loan, taxpayers were profiting from the agreement.A spokesman for Mr. Esper said that the company met the criteria to be eligible for the loan and emphasized that the report made clear that senior staff at the Defense Department recommended that he certify it. The Treasury Department made the final decision to issue the loan, the spokesman added.The Trump InvestigationsCard 1 of 6Numerous inquiries. More

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    Ukraine Crisis: What Happens Next for the Rest of the World?

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    Europe faces a new refugee crisis, and harsh economic penalties to punish Russia are expected to reverberate worldwide.WASHINGTON — Much of the world woke up on Thursday to the specter of an all-out war in Europe after President Vladimir V. Putin of Russia ordered his troops to invade Ukraine. That left millions of people — in Ukraine and Eastern Europe, but also in the United States and elsewhere — wondering how the conflict would affect their lives.At least 40 Ukrainian solders were reported killed in the hours after the invasion, with estimates of tens of thousands of deaths over the course of the conflict. But beyond the anticipated bloodshed, economic penalties to punish Russia will reverberate worldwide.Rising energy costs and potentially slowing supply chains will take their toll on consumers. Russian cyberattacks could cripple electronic infrastructure. A new refugee crisis will require international assistance. And an era of relative calm in the West that has pervaded since the end of the Cold War might be coming to a close.Here is what might happen next on the military, economic and diplomatic fronts.More military forces head to NATO’s eastern borders.Many of the U.S. troops who arrived in Poland this month have been working with Polish forces to set up processing centers to help people fleeing Ukraine.Czarek Sokolowski/Associated PressNATO announced on Thursday that it was sending reinforcements to its eastern flank, joining some 6,500 U.S. troops the Pentagon has already dispatched to Eastern Europe and the Baltics.“We are deploying additional defensive land and air forces to the eastern part of the alliance, as well as additional maritime assets,” NATO said in a statement. “We have increased the readiness of our forces to respond to all contingencies.”The Pentagon is also repositioning about 1,000 troops in Europe. About 800 U.S. troops are moving to the Baltics from Italy; 20 Apache helicopters are heading to the Baltics from Germany, and 12 Apaches are going to Poland from Greece. Eight F-35 strike fighters are heading to Lithuania, Estonia and Romania from Germany, the Pentagon said.In addition, U.S. Army troops, including those from the 82nd and 101st Airborne divisions, are preparing to move closer to Poland’s border with Ukraine to help process people fleeing the country, an Army spokesman said on Thursday.Many of the 5,500 troops from the 18th Airborne Corps who arrived in Poland this month have been working with the State Department and Polish forces to set up three processing centers near the border to help deal with tens of thousands of people, including Americans, who are expected to flee Ukraine.In Jasionka, Poland, an indoor arena has been outfitted with bunk beds and supplies for up to 500 people; U.S. officials say that capacity could be quickly expanded. In Austria, Chancellor Karl Nehammer said on Wednesday that he was prepared to accept refugees. The State Department and the U.S. Agency for International Development are funding relief organizations that are currently providing food, water, shelter and emergency health care to people in the region who have fled to escape the violence.In the days to come, the C.I.A. will assess what kind of assistance it can provide to Ukraine. If a Ukrainian resistance develops in parts of the country that Russia seeks to control, the agency could secretly supply partisan forces with intelligence and, potentially, armaments.“We need to support the resistance to the invasion and the occupation in all ways possible,” said Mick Mulroy, a former C.I.A. paramilitary officer and senior Pentagon official in the Trump administration. “Our special operations and intelligence assets with an extensive knowledge base from 20 years of fighting insurgencies should be put to immediate use.”‘Severe’ sanctions from the U.S. and Europe.The Treasury Department is likely to put one or more Russian state-owned banks on the agency’s list for the harshest sanctions.Natalia Kolesnikova/Agence France-Presse — Getty ImagesPresident Biden on Thursday plans to announce “severe sanctions” against Russia to try to deter Moscow from carrying out further violence in Ukraine and to punish it for its actions, U.S. officials said.The next set of economic sanctions is expected to be much harsher than what U.S. officials had described as a first tranche that was imposed on Monday and Tuesday. Mr. Biden is likely to order the Treasury Department to put one or more large Russian state-owned banks on the agency’s list for the harshest sanctions, known as the S.D.N. list. That would cut off the banks from commerce and exchanges with much of the world and affect many other Russian business operations.The Biden administration said on Tuesday that it was imposing that kind of sanctions on two banks, VEB and PSB, but those are policy banks with no retail operations in Russia.Administration officials have studied how sanctions would affect each of the big banks, including Sberbank and VTB, Russia’s two largest banks. Sberbank has about a third of the assets in the country’s banking sector, and VTB has more than 15 percent. Some experts are skeptical that the administration would put those two banks on the S.D.N. list for fear of the consequences for the Russian and global economies. For now, U.S. officials are not ready to cut off all Russian banks from Swift, the important Belgian money transfer system used by more than 11,000 financial institutions worldwide.The Treasury Department has other sanctions lists that would impose costs while inflicting less widespread suffering. For example, it could put a bank on a list that prevents it from doing any transactions involving dollars. Many international commercial transactions are done in U.S. dollars, the currency that underpins the global economy.The Treasury Department is also expected to put more Russian officials, businesspeople and companies on the sanctions lists.By Thursday afternoon in Russia, the nation’s stock market had fallen nearly 40 percent.The Commerce Department has been making plans to restrict the export of certain American technologies to Russia, a tactic that the Trump administration used to hobble Huawei, the Chinese telecommunications company. The controls would damage the supply chain for some Russian sectors. U.S. officials said their targets included the defense industry and the oil and gas industry.European officials are expected to announce sanctions similar to many of the ones planned by the United States, as they did this week. However, they have been more wary of imposing the harshest sanctions because of the continent’s robust trade with Russia.Although Mr. Biden has said he will contemplate any possible sanctions, U.S. officials for now do not plan big disruptions to Russia’s energy exports, which are the pillar of the country’s economy. Europe relies on the products, and surging oil prices worldwide would cause greater inflation and more problems for politicians. However, Germany announces this week that it would not certify Nord Stream 2, a new natural gas pipeline that connects Russia and Western Europe. On Wednesday Mr. Biden announced sanctions on a subsidiary of Gazprom, the large Russian energy company, which built the pipeline and had planned to operate it.Understand Russia’s Attack on UkraineCard 1 of 7What is at the root of this invasion? More