Trump’s Big Beautiful Gifts to Artificial Intelligence Companies

Technology Policy Brief # 149 | By Mindy Spatt | June 10, 2025

In his first few days in office, Donald Trump announced a $500 billion joint venture with OpenAI, Oracle, and Softbank to invest in growing the US’s AI infrastructure and rescinded former President Joe Biden’s executive order requiring safety submissions from AI developers.  His big, beautiful bill showers much more money in the industry, and aims to eliminate state oversight or regulation of AI companies as well.

Analysis

The version of Trump’s budget bill passed by the House of Representatives would completely end the ability of states to regulate AI or even draft regulations for the next 10 years.  The AI provisions were severely criticized by advocacy groups, democrats, and even some Republicans.  A group of 40 state Attorneys General, both Democrats and Republicans, said in a press release, “Imposing a broad moratorium on all state action, while Congress fails to act in this area, is irresponsible and deprives consumers of reasonable protections.”  California’s Attorney General Rob Bonta was one of the signatories.  His state is currently considering 30 laws that wouldn’t pass muster under Trump’s proposal, laws designed to mitigate the discriminatory impacts of AI, better evaluate the use of AI in government services, and additionally analyze harmful effects.

“While artificial intelligence can have enormous benefits for consumers, it also presents special challenges…”  said Grace Gedye, policy analyst at Consumer Reports. “This incredibly broad preemption would prevent states from taking action to deal with all sorts of harms, from non-consensual intimate AI images, audio, and video, to AI-driven threats to critical infrastructure or market manipulation, to protecting AI whistleblowers, to assessing high-risk AI decision-making systems for bias or other errors, to simply requiring AI chatbots to disclose that they aren’t human.”

Also at risk are rules related to AI’s use in political campaigns and elections.  More than 20 states have enacted laws to address election misinformation and manipulation made easy by new AI tools.  In the last presidential election, misinformation was rampant, and inflammatory content was often found to be fake. AI can create false images and false depictions of events, voting problems, and even election interference.

While the bill squeaked through in the House of Representatives, the AI provisions are meeting resistance in the Senate.  Senator Marsha Blackburn (R-TN) defended her state’s right to protect artists from deepfakes, saying, “Tennessee passed the ELVIS Act, which is like our first generation of the NO FAKES Act, [and] we need those protections….”

The bill doesn’t make any provisions for victims of AI mistakes, even when the federal government is responsible.  The two million Texas Medicaid patients who were kicked off the program or denied coverage might find it ironic that, while eliminating consumer protections, the bill allocates $25 million in contracts with AI companies to detect and recoup Medicare fraud.   The money for fraud prevention is pennies when compared to other provisions of the bill, which include billions of dollars in AI contracts with the Pentagon and Homeland Security.

A provision being floated by Senate Republicans walks the ban back a bit, saying only states that don’t regulate AI would be eligible for federal broadband funding.  Even if that amendment is accepted, it’s not likely to satisfy critics like The Center for Democracy and Technology, which has warned against eliminating regulatory oversight, saying“The resulting unfettered abuses of AI or automated decision systems could run the gamut from pocketbook harms to working families like decisions on rental prices, to serious violations of ordinary Americans’ civil rights…”

The group is urging rejection of the regulatory provisions under Congress’s Byrd Rule, which prohibits budget reconciliation bills from being padded with “extraneous matters” that have no direct impact on the federal budget, an elimination process known as a Byrd bath.

Engagement Resources

• These Hidden Provisions in the Budget Bill Undermine Our Democracy, by Eric Kashdan, June 6, 2025,https://campaignlegal.org/update/these-hidden-provisions-budget-bill-undermine-our-democracy
• Consumer Reports opposes AI state preemption language in House budget reconciliation bill, May 12, 2025, https://advocacy.consumerreports.org/press_release/consumer-reports-opposes-ai-state-preemption-language-in-house-budget-reconciliation-bill/
• Tracker: State Legislation on Deepfakes In Elections https://www.citizen.org/article/tracker-legislation-on-deepfakes-in-elections/
• Throw the AI Regulations Ban out with the Byrd Bath Water by Travis Hall, May 20, 2025  https://cdt.org/insights/throw-the-ai-regulations-ban-out-with-the-byrd-bath-water/