No Rules, No Remedy: The Case for AI Regulation
After months of debate, President Trump signed the One Big Beautiful Bill Act (H.R. 1) on July 4. The final bill doesn’t include any enforceable provisions or regulations for AI, but it may be the bill that jumpstarts the conversation we desperately need. The BBB began as an overhaul of tax and infrastructure policy, and earlier drafts of the bill also proposed a ten-year moratorium on any state-level regulations of AI. That provision would have blocked state governments from enforcing existing or future laws for the industry. If allowed to pass, it would have frozen the country’s ability to respond to AI harms for an entire decade. This would have been a huge gamble considering the industry changes by the day.
It’s understandable that the government does not want states to rush to regulate. Heavy handed regulation by those who do not understand the tech could easily stifle innovation or cause confusing, piecemeal legislation that varies by state or even counties. Ideally, there will be uniform regulation that doesn’t buckle the industry under mountains of red tape in the name of compliance, but considering the gridlock in our federal government, it’s hard to count on that.
The ten-year moratorium was met with fierce bipartisan resistance and ultimately removed from the bill in a 99–1 Senate vote. Lawmakers from both sides of the aisle made it clear that the U.S. cannot afford to hand over unchecked power to Big Tech. Sen. Marsha Blackburn, a Republican from Tennessee, said the original provision was “not acceptable to those who need these protections the most.” Sen. Maria Cantwell warned it could create “a back door” to weaken consumer protections nationwide. Even Sen. Josh Hawley, usually an opponent of federal intervention, defended states’ rights to experiment with AI safeguards and warned that Big Tech shouldn’t be handed “a blank check.” In a time of extreme political divisiveness, the fact that the Senate almost unanimously voted to remove this moratorium speaks volumes. I am a huge fan of the free market, but recognize the danger of a ten year moratorium on regulation.
In place of the moratorium, the final version of the bill includes a nonbinding directive that calls on the Department of Commerce to study the development of AI and recommend best practices by 2026. The bill didn’t offer any answers to the issue of AI regulation, but it did bring it to national attention.
The debate around the Big Beautiful Bill made it clear that AI is no longer a niche issue. Federal agencies are already tracking the harms. The FTC has flagged deepfake scams and deceptive chatbots as emerging consumer threats. NIST has issued warnings about the social and economic fallout of poorly trained and untested AI systems. A recent Harvard Kennedy School survey showed that 83% of Americans believe AI will worsen election misinformation. The risks of AI are very real and already affecting consumers. The economic concerns are just as urgent. According to the IMF, 40% of jobs worldwide and 60% in advanced economies face disruption from AI. The World Economic Forum projects a net loss of 14 million jobs by 2027 unless governments invest in workforce transition and reskilling. Microsoft and other tech giants have already begun cutting thousands of jobs while doubling down on AI investment. Without regulation and workforce planning, the burden of disruption will fall hardest on everyday workers.
We have already seen what complete lack of regulation can do to an emerging industry. A lack of early oversight allowed speculative excess and fraud to go unchecked in the crypto industry until the collapse of firms like FTX forced a reckoning. I had clients who were affected by the FTX collapse, and have watched as blockchain moved from being exciting and innovative to viewed as a scam. AI is now headed down the same path. We’re already starting to see people roll their eyes at the hypemen of AI, and many average consumers are turning on it altogether. Fear for their jobs, anger at AI’s theft of intellectual property, and disappointment of current AI models is already starting to color the industry. We cannot reward hype and scale over safety. The tech industry should have learned its lesson during one of the many black swan events in crypto. Emerging tech needs guardrails, and if done well, it will not stifle innovation. Thoughtful and informed regulations protect the public from being the test case for tech gone wrong.