Senate Can Keep Ban on State AI Rules in Trump Tax Bill

The US Capitol in Washington on June 2. Photographer: Al Drago/Bloomberg Photo by Al Drago /Bloomberg

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(Bloomberg) — A Republican effort to block US states from enforcing new artificial intelligence regulations will remain in President Donald Trump’s massive tax and spending package for now, marking a win for tech companies pushing to stall and override dozens of AI safety laws across the country. 

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In a surprise decision, Democrats said the Senate parliamentarian ruled the provision aligns with the special budgetary process Republicans are using to consider the tax package. That process allows the GOP to avoid making concessions to Democrats, who otherwise could filibuster legislation.

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The Senate version of the AI moratorium would deny states federal funding for broadband internet projects if they enforce AI regulations.

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The provision will likely still be challenged on the Senate floor, where stripping the provision would need just a simple majority. Some Republicans in both the House and Senate have pushed back on the AI provision.

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“We do not need a moratorium that would prohibit our states from stepping up and protecting citizens in their state,” Tennessee Republican Senator Marsha Blackburn said last week.

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Senate Parliamentarian Elizabeth MacDonough has advised lawmakers that many other provisions have failed to pass muster for the budget process, including language requiring state matching funds for food stamps and a requirement that people suing the federal government post enormous bonds to obtain temporary restraining orders, Democrats said. 

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Republicans are racing to pass the fiscal package by July 4, with Senate leaders planning to vote on it this week. 

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The bills’ provisions are being litigated by staff in a closed-door process, with Senate Budget Committee Democrats releasing periodic updates to the media.

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The AI provision would benefit many of the US’s largest tech and AI companies, some of which have lobbied against a state-by-state “patchwork” of rules governing AI.  

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California, New York, Utah and dozens of others have introduced or enacted AI laws in recent years, including bills to address concerns about data privacy, copyright and bias. Congress has yet to pass a federal framework on AI, which has effectively left the states to figure out how to set rules around the technology.

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The House passed its version of the bill, which would impose a 10-year moratorium on any state law regulating artificial intelligence or automated decision systems.

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House Speaker Mike Johnson said June 9 that the AI provision had the full backing of the White House, including AI and crypto czar David Sacks. 

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More than 200 state lawmakers from both parties urged Congress to scrap the measure, which could have nullified a wide range of consumer protection laws on topics including children’s online safety, generative AI harms, and government AI adoption and deployment, according to the AI safety think tank Center for Responsible Innovation.

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Senate Republicans also made progress on the broader bill as the Joint Committee on Taxation — the key congressional scorekeeper on tax matters — found the new tax provisions in the bill would add a net $441 billion to deficits through 2034. The Senate GOP’s preferred “current policy” baseline assumes that trillions of dollars in expiring Trump tax cuts are free.

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The score gives lawmakers room to negotiate final agreements on the broader package, including setting the level of the state and local tax deduction and how fast to end green energy tax credits.

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—With assistance from Erik Wasson.

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