States could soon be forced to choose between having AI regulations or receiving crucial federal broadband funding, as a Republican-backed proposal aims to block state-level AI oversight for an entire decade.
Key Takeaways
- A Republican proposal would prevent states from regulating AI for 10 years if they want access to federal broadband funding, specifically a $500 million AI fund.
- Senate Parliamentarian Elizabeth MacDonough has approved language from Sen. Ted Cruz rebranding the measure as a “temporary pause,” allowing it to remain in the reconciliation bill.
- The proposal has created unusual political alliances, with both Democrats and some Republicans opposing it on grounds of states’ rights and consumer protection.
- Critics fear the moratorium gives Big Tech companies free rein to develop AI without proper oversight, potentially enabling censorship of conservative voices.
- The measure has been modified from its original form that would have affected the entire $42 billion broadband fund to only impact a smaller $500 million AI fund.
Federal Funding Tied to State AI Regulation Freeze
A controversial provision in President Trump’s “One Big Beautiful Bill” is creating unusual political divisions across Washington. The Senate Parliamentarian recently approved Republican language that would create a 10-year moratorium on state-level AI regulations in exchange for access to federal broadband funding. This provision, championed by Senator Ted Cruz, would specifically affect states’ eligibility for a portion of $500 million designated to enhance IT systems through the Department of Commerce, rather than the entire $42 billion Broadband Equity, Access, and Deployment (BEAD) program as initially proposed.
“History has shown that this light-touch regulatory approach to new technologies has been incredibly successful in promoting American innovation and jobs,” said Senator Ted Cruz, who has been the primary architect of the provision.
The measure represents a strategic effort to condition federal financial aid on the non-regulation of artificial intelligence, encouraging states to focus on improving broadband and technological infrastructure while delaying regulatory action until 2035. Cruz and his allies argue that a unified federal approach would be more effective than a patchwork of state regulations, which they claim could hamper innovation in the rapidly evolving AI sector.
Bipartisan Opposition Forms Against the AI Pause
The proposal has encountered resistance from both sides of the political aisle, creating unusual alliances. Republican Senator Marsha Blackburn of Tennessee has emerged as a vocal opponent, expressing concerns about states’ rights and the protection of creative industries that could be threatened by unregulated AI development. Her stance reflects broader conservative principles of federalism and limited government intervention in state affairs.
“We cannot prohibit states across the country from protecting Americans, including the vibrant creative community in Tennessee, from the harms of AI,” said Senator Marsha Blackburn, highlighting concerns about potential impacts on creative industries and content creators.
Blackburn has promised to fight the provision with amendments, aligning with Democrats who argue that 24 states have already begun implementing AI regulations to protect their citizens. This cross-party opposition underscores the complex nature of AI regulation and the differing perspectives on federal versus state authority in emerging technological domains. Vice President JD Vance has reportedly expressed uncertainty about whether the provision will remain in the final version of the bill.
Conservative Concerns About Big Tech Power
Populist conservatives and members of the House Freedom Caucus have raised alarms about the potential for unregulated AI to become a tool for censoring conservative voices online. This concern reflects growing skepticism among many conservatives about the power and political leanings of major technology companies. The issue has created a rift within Republican ranks, with some supporting the moratorium for economic and innovation reasons while others fear it gives too much unchecked power to Silicon Valley.
“This ten-year moratorium in the Big Beautiful Bill gives Big Tech the green light to censor conservatives,” warned Mike Davis, highlighting fears that without state-level oversight, technology companies could use AI to suppress conservative viewpoints.
While the Trump administration has taken a generally supportive position on technological innovation, the divide over this specific policy highlights competing priorities within the conservative movement. David Sacks, an AI adviser to President Trump, has supported the pause to prevent what he calls “AI Doomerism” – excessive regulation based on speculative fears about artificial intelligence. This perspective favors a more market-driven approach that allows AI development to proceed with minimal government interference.
Path Forward Through Reconciliation
The Senate Parliamentarian’s ruling that the proposal can remain in the reconciliation bill is significant because it means the measure could be passed with a simple majority vote rather than requiring the 60 votes typically needed to overcome a filibuster. This procedural victory increases the likelihood of the provision surviving, though it still faces challenges as the bill moves through the legislative process. The reconciliation process allows certain budget-related measures to pass with a simple majority.
“Senate Parliamentarian Elizabeth MacDonough announced on June 21 that the Republican-backed measure to put a temporary block on states’ regulation of artificial intelligence (AI) can remain in the One Big Beautiful Bill.”
As the debate continues, Republican senators are carefully weighing the potential impact on internet grants in their states against broader principles of federalism and technological innovation. The outcome of this legislative battle will significantly influence how AI develops across America in the coming decade and could set important precedents for the relationship between federal funding and state regulatory authority.
