The Fight Against Federal Moratorium on State AI Regulations
Cast your mind back to May of this year: Congress was deeply involved in debates over a massive budget bill. Amidst the many significant provisions, Senator Ted Cruz introduced a controversial tech policy proposal: a ten-year moratorium on the ability of states to regulate artificial intelligence. This proposal was met with widespread concern and criticism.
The Impact of AI Companies
The few massive AI companies seem to be overwhelming our economy: their energy demands are overshadowing household needs, their data requirements are overriding creators’ copyrights, and their products are causing mass unemployment as well as new types of clinical psychoses. In a time when Congress appears unable to pass meaningful consumer protections or market regulations, why would we hinder the one entity evidently capable of doing so—the states?
State-Level Concerns and Actions
States that have already enacted consumer protections and other AI regulations, like California, and those actively debating them, like Massachusetts, were alarmed. Seventeen Republican governors wrote a letter decrying the idea, and it was ultimately defeated in a rare vote of bipartisan near-unanimity.
The idea is back. Before Thanksgiving, a House Republican leader suggested they might include it in the annual defense spending bill. Then, a draft document leaked outlining the administration’s intent to enforce the state regulatory ban through executive powers. An outpouring of opposition beat back that notion for a few weeks, but recently, it was announced that the promised Executive Order is indeed coming soon. This would put a growing cohort of states, including California and New York, as well as Republican strongholds like Utah and Texas, in jeopardy.
The Motivations Behind the Proposal
The motivations behind this proposal are clear: conservative ideology, financial interests, and international competition. The intellectual argument in favor of the moratorium is that state regulation on AI would create a patchwork that would be difficult for AI companies to comply with, slowing the pace of innovation needed to win an AI arms race with China.
AI companies and their investors have been aggressively promoting this narrative for years, backing it with substantial lobbying dollars. It’s a convenient argument, useful not only to eliminate regulatory constraints but also to win federal bailouts and energy subsidies.
Citizen Perspectives and Partisan Issues
Citizens should consider this argument from their own point of view, not Big Tech’s. Preventing states from regulating AI means that those companies get to influence Washington, but your state representatives are powerless to represent your interests. Which freedom is more important to you: the freedom for a few near-monopolies to profit from AI, or the freedom for you and your neighbors to demand protections from its abuses?
There is an element of this that is more partisan than ideological. Some argue that federal preemption is needed to prevent “progressive” states from controlling AI’s future. This indicates creeping polarization, where Democrats criticize the monopolism, bias, and harms of corporate AI, and Republicans take the opposite side. It doesn’t help that some in the parties also have direct financial interests in the AI supply chain.
Bipartisan Support for State-Level AI Legislation
This does not need to be a partisan wedge issue: both Democrats and Republicans have strong reasons to support state-level AI legislation. Everyone shares an interest in protecting consumers from harm created by Big Tech companies. Leading the charge to defeat the initial AI moratorium proposal, Republican Senator Masha Blackburn explained that “This provision could allow Big Tech to continue to exploit kids, creators, and conservatives. We can’t block states from making laws that protect their citizens.”
More recently, Florida Governor Ron DeSantis wants to regulate AI in his state. The often-heard complaint that it is hard to comply with a patchwork of state regulations rings hollow. Pretty much every other consumer-facing industry has managed to deal with local regulation—automobiles, children’s toys, food, and drugs—and those regulations have been effective consumer protections.
The AI Industry and Compliance
The AI industry includes some of the most valuable companies globally and has demonstrated the ability to comply with differing regulations around the world, including the EU’s AI and data privacy regulations, which are substantially more onerous than those so far adopted by US states. If we can’t leverage state regulatory power to shape the AI industry, to what industry could it possibly apply?
The Power of State Regulations
The regulatory superpower that states have here is not size and force, but rather speed and locality. We need the “laboratories of democracy” to experiment with different types of regulation that fit the specific needs and interests of their constituents and evolve responsively to the concerns they raise, especially in such a consequential and rapidly changing area as AI.
We should embrace the ability of regulation to be a driver—not a limiter—of innovation. Regulations don’t restrict companies from building better products or making more profit; they help channel that innovation in specific ways that protect the public interest. Drug safety regulations don’t prevent pharma companies from inventing drugs; they force them to invent drugs that are safe and efficacious. States can direct private innovation to serve the public.
