A controversial provision hidden in the Republican budget bill could fundamentally transform how artificial intelligence is governed across America. The proposal would prohibit states from enacting any AI regulations for a decade, sparking fierce debates between consumer groups and tech interests.
The moratorium has been condemned as being unusually sweeping. States would be unable to defend their citizens against dangerous uses of AI, such as discriminatory hiring tools, deepfakes to spread disinformation, and addictive chatbots, critics assert. These issues aren’t abstract – they’re already having an impact on people’s lives right now.
What makes the situation most difficult is that Congress currently has no federal AI bill before it with which to complete the regulatory gap. That would mean that if the moratorium bill becomes law, consumers would be caught in the middle unless Washington lawmakers can reach an accord on sweeping AI regulations – something that would take years based on the record of Congress on tech matters.
The only option for injured consumers would be to sue companies, an expensive and time-consuming venture most individuals simply cannot take on.
Business Groups vs. Consumer Advocates
Supporters of the proposal, including the powerful Chamber of Commerce, envision otherwise. They argue that the removal of state-level rules would allow American companies to compete globally by doing away with what they describe as a confusing patchwork of differing rules from state to state. Their argument is that similar federal standards would be more business-friendly and innovative.
But a coalition of 77 advocacy organizations sees this as a across-the-board giveaway to tech companies, some of which have donated to President Trump’s campaign. Groups like Common Sense Media, Fairplay, and the Center for Humane Technology have signed an open letter to Congressional leaders, warning that the provision would give AI companies “no rules, no accountability, and total control.”
States Already Taking Action on AI
Several states have already passed AI-specific legislation that would be repealed by this moratorium. Yet, the Tennessee ELVIS Act, for instance, explicitly safeguards musicians from AI duplication of their voices without their consent. The Tennessee Republican Senator Marsha Blackburn has backed the bill and called for prudence in imposing a hasty federal moratorium without adequate safeguards.
California has been especially busy, with bills introduced to crack down on AI companion sites that supporters claim are endangering teens. One of the bills would prohibit “anthropomorphic chatbots providing companionship” to kids because such programs can form unhealthy emotional bonds and even lead to deception of children.
The Bigger Picture of AI Usage
Tech policy analysts note that states have increasingly moved to control social media platforms as well as technology giants, particularly to safeguard children and the privacy of personal data. Now they’re doing it for AI.
Camille Carlton of the Center for Humane Technology notes that governments are not trying to stifle innovation in key areas like medicine or security. Instead, they are trying to solve fundamental safety concerns like preventing fraud and maintaining privacy. Most proposals from states even include different regulations for different sizes of companies, recognizing that small startups ought not to be held to the same standard as tech giants.
The concern among experts is that this trend, in which technology companies lobby against state legislations while threatening federal intervention, then lobby against federal legislations as well, has deprived consumers of meaningful protections for decades.
Gaia Bernstein, a professor of technology policy at the Seton Hall University School of Law, cautions that excluding state activity would be especially devastating to child protection. As artificial intelligence becomes more woven into the algorithms that dictate what children are exposed to online, regulation of AI is now critical to combating such things as overuse of the screen and other online dangers.
“Most of the protections I’m seeing are coming from the states,” says Bernstein. “Congress has been pretty much unable to do anything.” “If you’re saying that states can’t do anything, then it’s very alarming, because where are any protections going to come from?”
The debate highlights the central question of how America would propel new technologies: Would we propel business innovation and federal uniformity, or would we let states innovate, protecting their citizens while federal legislators pursue broad solutions?
