AI titans flex clout to leverage tax bill to override state laws

Boston Globe

4 days ago

Palmer Luckey, founder of defense tech company Anduril Industries Inc., took to the social media platform X on Wednesday to implore Republican lawmakers not to drop the ban on state regulation from the legislation, calling it 'absolutely critical for the economic, educational, military and cultural future of America.'
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Marc Andreessen, head of the leading venture capital firm Andreessen Horowitz and one of Trump's most prominent tech industry allies, on Wednesday also shared posts advocating for the provision.
Even if the pause on state AI laws is excluded from the tax bill, the maneuver shows key power centers of the Republican party firmly behind the AI industry's wish for minimal regulatory interference as the emerging technology enters a potentially pivotal phase.
That influence is likely to shape the Trump administration's executive actions and possibly future legislation unburdened by the tight timetable and complicated politics of the tax bill.
Trump Commerce Secretary Howard Lutnick joined the social media campaign Wednesday on behalf of the ban, calling it essential to 'to stay ahead of our adversaries and keep America at the forefront of AI.'
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The 10-year ban tucked into the House version of the tax bill and current Senate draft would block states from enforcing AI laws. In the absence of federal regulation, states over the past few years have enacted dozens of new laws — curbing deepfakes, protecting artists, banning algorithmic discrimination — aimed at preventing harms from the nascent technology.
The ban is a top priority for big tech companies like Meta Platforms Inc. as well as venture capital firms, such as Andreessen Horowitz, which backs smaller but still powerful players.
'Don't expect it to disappear,' said Joseph Hoefer, AI policy lead at lobbying firm Monument Advocacy, who represents clients including Booz Allen Hamilton and Atlassian Corp. 'This provision, or some version of it, will likely become a mainstay in any serious AI legislation going forward.'
But the unified Democratic opposition to Trump's tax bill and the president's eagerness for quick passage give Republican opponents of a ban a lot of leverage since the party can afford to lose only three Republican senators.
At least four Republican senators expressed reservations about the ban on AI regulation in interviews. Republican senators Marsha Blackburn of Tennessee and Josh Hawley of Missouri have both vowed to strip the provision from the legislation.
'We cannot prohibit states across the country from protecting Americans, including the vibrant creative community in Tennessee, from the harms of AI,' said Blackburn, whose state has a new law that protects musicians and artists from unauthorized AI use and is home to country music capital Nashville.
Florida Republican Senator Rick Scott told Bloomberg News he believes Congress has to 'continue to allow our states to innovate.' Senator Ron Johnson of Wisconsin said a decade-long freeze 'might be a little long.'
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Senate Commerce Chair Ted Cruz, a Texas Republican, on Wednesday released an updated version of his committee's portion of the bill that specifies states could still pass 'tech-neutral laws' that impact AI, such as broader consumer protection or intellectual property laws.
Supporters of the ban, including industry lobbyists, are seizing on the opportunity to influence congressional action by flooding the Hill this week to convince Republicans the AI provision should remain in Trump's bill.
Companies have largely deferred to trade associations like the Chamber of Commerce and tech groups like INCOMPAS in the lobbying fight. The Chamber of Commerce in a statement said they support the provision because it would stop 'confusing' state and local AI regulations.
'We cannot afford to wake up to a future where 50 different states have enacted 50 conflicting approaches to AI safety and security,' said Fred Humphries, corporate vice president of US government affairs for Microsoft Corp.
White House tech adviser Michael Kratsios and AI czar David Sacks have publicly and privately praised the idea of a ban on state regulation.
Kratsios at a Bloomberg event earlier this month said there are 'significant downsides' to a patchwork of state regulations and supports a national standard, which he added would benefit smaller tech companies in the market.
A spokesperson for the White House Office of Science and Technology Policy said the office has 'not been involved' in conversations about the bill. The White House did not immediately respond to a request for comment.
The struggle has highlighted internal Republican battle lines over how to handle the fast-moving technology backed by trillions of dollars in investments.
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Hardline conservative critics, including the influential think tank Heritage Foundation, say the proposal would infringe on states' ability to protect their citizens against risks posed by AI. Officials in all 50 states, including some Republican attorneys general, and dozens of advocacy groups have also criticized the GOP effort.
Senator Ed Markey of Massachusetts, a Democrat, said he plans to file an amendment to strip the moratorium out of the tax legislation. Republican opponents expect to join forces with Democrats to try to kill the measure.
'It's pretty clear that there's a bipartisan opposition,' Markey said.
Conservative Republicans in the House also vowed to oppose the provision.
But some supporters of the regulation ban still are optimistic it will remain in the tax package.
'I don't even think this is the top 10 most controversial things in the 'Big Beautiful Bill' politically,' said Neil Chilson, head of AI policy with the tech-backed Abundance Institute. 'There will be horse-trading. I think this has a real shot.'
And the support of key Trump officials signals the path the administration is setting. Sacks, the White House AI and crypto czar, earlier this month said the moratorium is the 'correct small government position.'
'The America First position should be to support a moderate and innovation-friendly regulatory regime at the federal level, which will help rather than hobble the US in winning the AI race,' Sacks said in a post on X.