Report from Bloomberg
In Brief – The moratorium on state laws regulating AI was stripped from the massive budget reconciliation bill carrying the budget and spending priorities of President Trump and the Republicans. A broad 10-year version, backed by AI industry leaders and the White House, was included in the bill that passed the House by one vote. That provision ran into problems with the Senate’s “Byrd Rule” that requires all budget reconciliation bill provisions primarily address taxing or spending. Sen. Ted Cruz (R-TX), Chairman of the Senate Commerce Committee, and a moratorium backer, modified it to deal with the Byrd Rule, but still needed to defeat an amendment to strip the provision. The Senate’s Democrats overwhelmingly opposed the AI measure, and several Republican Senators, led by Marsha Blackburn (R-TN), also announced that they would vote to strip it. Sens. Cruz and Blackburn reportedly negotiated a compromise that shortened it to 5 years and exempted a range of state efforts, but that deal fell apart in the end. Cruz blamed Blackburn. In a 4 am floor vote, the moratorium was stripped by a vote of 99 to 1, with even the strongest moratorium backers, including Cruz, voting to strip the doomed provision.
Context – Budget reconciliation is a special legislative vehicle that can pass the Senate without the usual 60-vote super-majority. This makes it a uniquely valuable way to pass major legislation when one party controls both Houses of Congress, and the White House, but has fewer than 60 Senators. As a rule, the minority party is unified in opposition to a reconciliation bill. So, besides the Byrd Rule requirements, provisions come down to the votes of the majority party. With such narrow Republican margins in the House and Senate, the AI moratorium had a problem despite overwhelming Republican backing. There was some ongoing conservative opposition, so a few committed Republicans opponents, combined with all Democrats, were too much. Once the dam broke, everyone walked away figuring that the right people knew where they stood when the measure was still in play.