The Hot, New Plan to Bribe States Into Deregulating Artificial Intelligence
AI infrastructure money in exchange for an AI Wild West.
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I recently wrote about how Congressional House Republicans — as part of the “big beautiful bill” being pushed by the Trump Administration — approved a provision that, if it became law, would prevent state or local governments from regulating artificial intelligence or “automated decision systems” for a decade.
Wielding phony concerns about a “patchwork of state laws,” big tech interests and their allies in the federal government are attempting to eliminate in one swift stroke a host of state or local laws that, for example: require the disclosure of the use of AI in health care and financial decisions; prevent landlords from using algorithms to collude on rental prices; protect against AI discrimination in the job application process; restrict the tactics social media platforms use to addict users; or bar the use of digitally altered images and videos in elections.
And with its broad brush, it’s easy to see proponents of this language wielding it to invalidate laws around gambling, financial services, and who knows what else.
Now that the bill is over in the Senate, it has taken on a new flavor due to the upper chamber’s unique rules and processes. If anything, the provision creating an AI regulation moratorium is now even more ridiculous, and reveals the absurd way in which federal policymakers craft national rules on emerging issues.
Rather than enacting a straight ban of state or local AI rules, the Senate version would bribe states not to pass them by linking a lack of AI regulations to federal money meant to build out AI infrastructure.
The reason for this conditional grant, as it’s known, requires getting into some annoying and dumb Senate procedure, so please bear with me: Senate Republicans are attempting to pass the bill under what are known as “reconciliation” rules, which allow budget-related measures to bypass a potential Senate filibuster and be adopted with a simple majority vote — and since Republicans have 53 votes in the Senate, a filibuster (which requires 60 votes to affirmatively break) is always a distinct possibility on anything they bring forward.
As crafted in the House, then, the AI-regulation moratorium would likely not have passed muster, since it was not budget related at all. The Senate Parliamentarian, an unelected bureaucrat who gets to decide whether or not bill text complies with reconciliation requirements, has decided that the Senate’s plan to link federal funding to having no AI-related laws does comply with those rules, which I guess is true, if you squint at it and turn it a bit sideways, since there is public money involved.
Apologies if your head is spinning a little bit. This process is, indeed, an absurd way to make federal law, bringing together a host of problems, including bipartisan abuse of the filibuster, arcane procedures to circumvent said filibuster, and random, unelected federal employees enforcing random, anti-democratic rules that dictate what does and does not receive a vote in Congress. Congress’ failure to reform the filibuster or craft normal legislation through an open committee and amendment process pushes the majority to lump all of its priorities into an unwieldy budget process that makes everything more confusing and janky than it needs to be.
Originally, the Senate version of the AI moratorium — drafted by Texas Sen. Ted Cruz — said that states that do not eliminate their AI-related laws would be denied access to funding under the Broadband Equity Access and Deployment Program, a $40 billion federal program to bring high-speed internet access to the whole country. But pushback from within their own party apparently made Senate Republicans cut that back to a smaller, $500 million pot of funding meant to bolster AI development.
So, here we are, with the Senate poised to adopt a giant bribe for states to eliminate any laws they have that are related to AI.
There’s a history of the federal government using conditions attached to federal money to enact state-level policy change — the most famous being Congress making a portion of state federal highway money contingent on states raising their drinking age to 21 — but this power isn’t all encompassing. In 2012, for example, the Supreme Court tossed out as too coercive an Obama-era plan to make all state Medicaid money contingent on expanding eligibility for the program.
But even having passed Senate parliamentarian and perhaps constitutional muster, it’s still unclear if this provision has the political juice to survive. Some prominent Senate Republicans, such as Missouri’s Josh Hawley and Tennessee’s Marsha Blackburn, have come out in opposition, as have some very loud House Republicans.
There’s also been significant state opposition, including in a bipartisan letter from 260 state legislators, and another from 40 state attorneys general. And that level of bipartisan state-level pushback makes sense: States across the political spectrum have been experimenting with regulating AI, and could see all those efforts obliterated if the federal government succeeds in preempting them.
Perhaps linking the moratorium to a much smaller and directly AI-related pot of funding will help win over skeptics, but maybe not. I also imagine state leaders will not care quite as much about losing access to AI money as they would have cared about losing access to billions of dollars in broadband funding (though the broadband program also has plenty of hiccoughs of its own), so it may be that the provision’s reach is blunted and not many states take the GOP up on its offer.
But whatever the machinations, the main point still remains: There’s a faction in Congress, at the behest of big tech interests, that is intent on obliterating state efforts to ensure there are some guardrails around the use and dispersion of artificial intelligence, even as it creeps into more areas of our daily life.
Not every state level bill dealing with AI will be perfect, necessary, or even productive, of course, but simply taking the option off the table does a disservice to everyone who will be affected by AI in the coming years, and will make it so tech interests can focus their lobbying heft on ensuring that Congress passes nothing meaningful to rein in their excesses either.
Some members of Congress have said they will push to amend the budget bill to remove the AI-law moratorium entirely. So let’s end here: A call to your senator or representative saying you oppose the AI-law moratorium likely wouldn’t hurt.
SIMPLY STATED: Here are links to a few stories that caught my eye this week.
Virginia has no state rules governing the impacts of data center development, so localities are stepping up.
Facebook is threatening to cut off news content in Oregon if the state legislature adopts a law requiring social media platforms to pay publications a cut of the profit the platforms make on news.
Michigan Attorney General Dana Nessel’s office raided the state’s economic development agency as part of a corruption probe.
Texas Gov. Greg Abbott signed a bill to create a state bitcoin reserve. (You can read my thoughts on state cryptocurrency reserves here.)
The real estate broker Compass is suing Zillow, alleging that it “is engaged in an anticompetitive conspiracy to maintain a monopoly over digital home listings.”
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— Pat Garofalo