Mostly because it's generally a bad idea for government to try to compete with a brand new tech industry with hundreds of billions in private capital developing commercial models. If the American private industry does actually wash out vs Chinese open models there might be talent available for them to put money into, so maybe they are just preparing for that scenario in the meantime.

we're about witness the realization that "here's a tech that can make us a whole bunch of money" is actually "here's tech that will establish the next hegemony." american companies may compete with chinese companies on the former. only the USG can compete with the PRC on the former.

The American attitude is generally to let private companies build up a new industry so it can create jobs and pay taxes. However, in the LLM race, the Chinese open weight playbook pretty much killed that. China has basically commoditized LLMs. Chinese models are good enough, so the race has come down to who can offer the cheapest tokens.