⚖️ Senate removes AI moratorium

Author

Liam Gill
July 08, 2025

Senate Strips AI Moratorium from GOP Budget Bill

In a near-unanimous 99-1 vote, the U.S. Senate on Tuesday removed a provision from the Trump administration’s budget reconciliation bill that would have blocked states from regulating AI for 10 years. The so-called “AI moratorium,” introduced by Sen. Ted Cruz (R-TX), has drawn strong support from tech leaders like OpenAI’s Sam Altman and a16z’s Marc Andreessen, who argue that state-level AI laws risk creating a confusing regulatory patchwork.

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Bipartisan Rejection of Silicon Valley’s ‘Light-Touch’ Push

Opposition came from across the aisle, as critics warned that the moratorium would leave powerful AI firms with minimal oversight and strip states of their ability to respond to rapidly evolving risks. Even Sen. Marsha Blackburn (R-TN), who had initially negotiated a five-year compromise with Cruz, withdrew support after backlash from lawmakers and advocacy groups. The final vote indicates that Congress is not willing to let federal inertia hinder state-led innovation in AI governance.

State Compliance Isn’t Going Away

For startups, this is a clear indication that state-level AI regulation will continue to be a factor, particularly in areas such as consumer protection, election integrity, and biometric privacy. Don’t bet on blanket federal preemption to simplify your compliance stack anytime soon. Instead, build with transparency, explainability, and consent frameworks that can flex to local requirements. With AI laws already on the books in over 20 states, staying ahead of statehouse trends may be your best regulatory moat.

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