Late Saturday, the Senate parliamentarian ruled that Republicans may keep a 10-year pause on state and local artificial intelligence rules in their massive tax and spending bill.
Senate Commerce Chair Ted Cruz (R-Texas) revised an AI moratorium that the House had already approved, reshaping it to meet the chamber’s budget rules. Under his draft, states and localities would lose billions in federal broadband expansion dollars if they enforce any AI regulations during the next decade. The moratorium marks a surprising win for GOP lawmakers, according to a Bloomberg report.
Both Republicans and Democrats presented their cases to Senate Parliamentarian Elizabeth MacDonough on Thursday. Cruz said in an interview recently that blocking state and local action on AI “is good policy” because it creates a uniform national approach.
In support, Rep. Jay Obernolte (R-Calif.) warned that without the freeze, the country could face “a labyrinth of regulation” with “50 different states going 50 different directions on the topic of AI regulation.”
Several conservative Republicans have openly opposed the measure
Senators Josh Hawley (R-Mo.) and Marsha Blackburn (R-Tenn.) joined forces with Democratic critics, arguing that states should retain the right to protect their citizens. Hawley said he will team up with Democrats to file an amendment to strip the moratorium once the full Senate considers the package.
Blackburn echoed that view last week, stating, “We do not need a moratorium that would prohibit our states from stepping up and protecting citizens in their state.”
On Capitol Hill, Rep. Marjorie Taylor Greene (R-Ga.) and members of the House Freedom Caucus have threatened to sink H.R. 1 if the 10-year legal freeze remains. Greene warned she will oppose the legislation outright unless the AI language is removed.
The decision benefits the tech companies that want to delay about twenty new AI safety laws nationwide. The Senate’s budget reconciliation process lets Republicans advance the tax and spending plan without Democratic votes, bypassing a potential filibuster.
In the Senate version, states that enforce new AI rules would lose federal broadband money. Senators could challenge the pause on the floor, and ending it takes just a simple majority vote.
Democrats say MacDonough told lawmakers that other ideas didn’t fit the budget rules, like making states match food stamp funding and forcing people suing the federal government to post huge bonds for temporary court orders.
With the July 4 deadline coming up, Senate leaders plan to vote on the spending bill this week. Staff from both parties are still working out the final details behind closed doors, and Senate Budget Committee Democrats are giving occasional public updates.
Want your project in front of crypto’s top minds? Feature it in our next industry report, where data meets impact.
