Dive Brief:
- A modified Senate proposal to pause artificial intelligence regulation at the state level is still “not acceptable,” Sen. Marsha Blackburn, R-Tenn., said late Monday.
- Blackburn’s unexpected stand dealt a major blow to an effort by the proposal’s lead sponsor, Senate Commerce Chairman Ted Cruz, R-Texas, to shore up support for the fragile compromise. The language was intended as an amendment to the Senate’s version of major tax-cut and spending legislation already approved by the House.
- “While I appreciate Chairman Cruz’s efforts to find acceptable language that allows states to protect their citizens from the abuses of AI, the current language is not acceptable to those who need these protections the most,” Blackburn said in an emailed statement. “This provision could allow Big Tech to continue to exploit kids, creators, and conservatives.”
Dive Insight:
Blackburn’s remarks came after U.S. Commerce Secretary Howard Lutnick praised the updated language earlier in the day, calling it a “pragmatic compromise” between Cruz and Blackburn.
“Congress should stand by the Cruz provision to keep America First in AI,” Lutnick said in a post on X.
The Senate this week began debating amendments to the massive tax-cut and spending legislation, which is intended to lay the foundation for much of President Donald Trump’s domestic agenda.
In May, the House narrowly passed a version of the bill with a provision to freeze state AI regulation for 10 years. Before the bill reaches the president’s desk for his signature, the two congressional chambers must resolve any differences between their versions.
Under pressure from Trump, Senate and House Republican leaders are racing to get the legislation across the finish line by the July 4 holiday, but the effort faces headwinds including opposition from Democrats.
“With every re-write, Senate Republicans have made their bill more extreme, pro-billionaire, and more hostile to people’s healthcare and livelihoods,” Senate Minority Leader Chuck Schumer, D-N.Y., said Monday in a speech delivered on the Senate floor.
Schumer said Senate Democrats will force votes on “one amendment after the other, again and again and again, to put Republicans on the record.”
Democrats have also challenged some provisions of the Senate version under the “Byrd rule,” which prevents the Senate’s budget reconciliation process — intended for easing passage of priority tax and spending bills — from being used for unrelated policy changes.
On June 21, the Senate Parliamentarian determined that Cruz’s AI provision does not violate the Byrd rule and could therefore remain in the bill, as previously reported by CFO Dive.
Cruz’s proposal would require any states seeking to receive a portion of a newly created $500 million federal AI funding program to agree to a pause on AI regulation.
Among other changes, the senator agreed to reduce the proposed moratorium period to five years instead of 10. He also agreed to exempt certain laws from the moratorium, including those designed to regulate deceptive acts or practices, child online safety, and the protection of a person’s name, image, voice, or likeness.
“This pause on heavy-handed regulations can be a victory for American entrepreneurs, Little Tech, small businesses, and states like Texas,” Cruz said in an emailed statement on Monday.
The current proposal “preserves the rights of states to protect consumers and content creators without giving the Left a backdoor to push their woke social agenda through AI regulation,” he added.
Meanwhile, a group of 17 Republican governors on Friday urged Senate Majority Leader John Thune, R-S.D., and U.S. House of Representatives Speaker Mike Johnson, R-La., to strip the AI provision from the spending bill before sending it to Trump for his signature.
“As Republican Governors, we support the One, Big, Beautiful Bill and President Trump’s vision of American AI dominance, but we cannot support a provision that takes away states’ powers to protect our citizens,” they wrote.
