Few things divide Republicans more effectively than questions of local versus federal rulemaking and whether Washington should dictate the rules of the road to states. This is just as true for cultural issues as it is for regulating industry, and the rise of artificial intelligence has presented a unique challenge here. The recent decision by the Senate to remove the temporary pause on state AI regulations from the “One Big Beautiful Bill” is a mistake that will ultimately harm American consumers and businesses. While its fate in the budget bill is sealed, Congress still has an opportunity to take action on a federal AI plan that sets America up for success.
The concept behind the moratorium was simple yet profound: allow the maturation of AI technology without an immediate, potentially stifling, cascade of state-level regulations. Federalism and the principle of states’ rights don’t mean the states have carte blanche to regulate on any given topic. AI is a general-purpose technology that flows seamlessly across state lines to Americans, just as it does with the internet and digital commerce.
As such, California and New York should not be able to export their onerous regulatory regimes to the rest of the country. By removing the regulatory pause, we’ve opted for a patchwork approach, where the most tech-paranoid states can enact AI rules that affect their neighbors.
The threat here is quite real. To date, over 1,000 state bills have been introduced regarding AI, ranging from AI and elections to so-called “anti-discrimination” proposals. This fragmented regulatory environment creates an immediate and substantial burden on businesses attempting to comply. The result will naturally be less innovation, fewer new consumer AI products, and a slowdown in the critical economic growth AI promises to deliver.
AI firms will staff up their legal departments instead of investing in R&D and engineers to develop the products of tomorrow.
Ironically, opponents of the moratorium framed it as a giveaway to Big Tech, but Big Tech stands to gain the most from the patchwork of state legislation. The industry heavyweights have the lawyers necessary to navigate the legislative morass that would trip up an upstart AI firm. And we’re not just talking about companies designing robots and LLMs; it can be as simple as AI-driven graphic design or food delivery apps.
When businesses are bogged down by regulatory hurdles, the development and deployment of these beneficial technologies are delayed or even abandoned altogether. Consumers are deprived of innovations that could save them time, money, or even improve their health.
Thankfully, for politicians, eliminating unrealized gains in technological innovation has little downside. Stamping out the possibility of future tech breakthroughs doesn’t require much imagination.
The United States is in a global race for AI leadership. Foreign rivals are eager to lead the AI revolution and closely watch how the U.S. handles this technology.
It is no secret that China, in particular, is nipping at the heels of the U.S. and unapologetically doing everything in its power to close the gap. Should China surpass the U.S., a world where the AI ecosystem is based on Chinese technology, it will devastate the U.S. and the globe economically and from a civil liberties perspective.
DEMOCRATS CRY WOLF OVER MEDICAID CUTS
Rep. Jay Obernolte (R-Calif.) and Sen. Ted Cruz (R-TX) understand the critical nature of this conversation, which is why they were driving the temporary pause proposal. They’re actively working on federal policy surrounding AI that would help set the U.S. up for success in global leadership on tech. Congress should enact federal legislation that preempts state AI model regulations, establishes clear national standards, and leverages a regulatory sandbox to foster innovation while ensuring consumers are adequately protected from harm.
The “War on Compute,” as some in the tech space have dubbed it, is just beginning. The decision to strip the AI moratorium from the Big Beautiful Bill is a significant misstep and a concerning precedent. A unified and pro-innovation federal approach is essential to ensure American leadership in AI and allow both businesses and consumers to fully realize its potential.
James Czerniawski is the Head of Emerging Technology Policy at The Consumer Choice Center. His work has been featured in the New York Post, Newsmax, U.S. News and World Report, and more. Follow him on Twitter @JamesCz19.
