President Trump is betting his presidency — and the future of the GOP — on lightly regulated, fast expansion of AI, Jim VandeHei and Mike Allen write in a "Behind the Curtain" column.

• Why it matters: Yes, Trump zigs and zags into countless political and diplomatic issues. But none comes close to his sustained, and surging, all-in alliance with tech billionaires and AI companies reshaping the U.S. economy.

He won on the backs of working-class MAGA. But he governs, socializes and surrounds himself with tech swells and moguls.

• From his inauguration to last month's glitzy White House dinner for the Saudis, Trump basks in the support, gifts and affirmation of the most famous AI leaders and companies in the world.

🖼️ The big picture: Trump has essentially fused Silicon Valley and government in a race to both beat China to all-powerful AI and rescue an economy that's treading water outside of the AI boom. He has rolled back regulations, awarded huge contracts, and downplayed concerns about AI safety or downside risk.

• Trump has prioritized maintaining U.S. dominance in AI, including a Week 1 executive order, "Removing Barriers to American Leadership in Artificial Intelligence" ... in July, an AI action plan, "Winning the AI Race" ... and last month, a "Genesis Mission" to "unleash a new age of AI‑accelerated innovation and discovery that can solve the most challenging problems of this century."

Tech companies have been partially shielded from some tariffs. AI companies will benefit from foreign investment promised to U.S. cities for chip plants and data centers. And Trump has helped broker deals that benefit U.S. AI companies in the Middle East and elsewhere.

• On a Joe Rogan podcast this past week, Nvidia co-founder and CEO Jensen Huang said Trump "saved the AI industry." Huang told us Trump responds to his texts at any hour. In Washington meetings, Huang is pushing back against national security objections to Nvidia selling its prized AI chips in China, saying restrictions haven't slowed Chinese AI.

The White House argues AI will augment, not replace, workers by making them more productive — and that jobs will be created in manufacturing, construction and energy services as America builds the physical infrastructure to support galloping AI.

• Kevin Hassett, director of Trump's National Economic Council, said on Fox Business this past week: "The AI economy is moving much faster than the dot-com economy in the '90s. And the coaches [co-pilots] that AI is producing are going to help make a lot of productive workers a heck of a lot of money."

💥 The political risk: Trump is flooring the gas pedal at the very moment some of his most ardent MAGA backers are warning AI could destroy the working-class Americans who brought him to power. The fear is that AI and AI-powered robots will eat vital American jobs before the nation has time to prepare the U.S. workforce for sci-fi-level change.

🎙️ Steve Bannon — host of "War Room," one of the most influential MAGA podcasts — has been privately and publicly lighting up the administration, calling the new tech alliance "crony capitalism" and warning that the "technocratic elite" are building a future threatening the jobs of much of the MAGA base.

• Bannon told us that catering to "arrogant" Big Tech is a trap for Trump, since such policies will be a loser with his hardcore supporters.

"The broligarchs are detested not simply by MAGA but America as a whole — they actually unite the populist left and right," Bannon said. "The tech bros will be the first to jump ship when the midterm fight turns ugly, as surely it will."

• ⬇️ Column continues below.

Steve Bannon's fear is borne out by the data, Jim and Mike continue.

• While the AI sector is booming, traditional manufacturing is shedding jobs and losing business, weighed down by the administration's aggressive new tariffs — the opposite of what was supposed to happen.

🥊 Reality check: If AI were a political candidate, it would be getting clobbered. Poll after poll shows deep concern about AI, especially among young people, and particularly among those nervous about getting or keeping a job.

• Because Trump is the AI president, and because his views are de facto GOP orthodoxy, Republicans are the AI party, even if some like Bannon or Sen. Josh Hawley (R-Mo.) are sounding alarms about high AI risk for kids, jobs and safety.

🏛️ Between the lines: The administration has pushed away regulation by trying to block state-level AI rules. Sen. Ted Cruz (R-Texas) and House Majority Leader Steve Scalise (R-La.) have pushed language to preempt state action, most recently in the annual defense bill, Axios tech policy reporters Maria Curi and Ashley Gold tell us.

• Congress has rejected these efforts twice now. So the administration is turning to executive action. The White House's AI action plan aims to slash red tape as part of a hands-off, pro-growth approach.

👀 The intrigue: A leaked executive order that would have made internet grants and other federal funds conditional on limiting AI regulation was put on hold but is back in play, sources tell Axios.

• Such a move would likely face legal battles and anger MAGA types, who view it as a giveaway to the tech industry.

The bottom line: If White House AI and crypto czar David Sacks and others are right that AI juices economic growth and new jobs, Republicans will likely prosper. But if they're wrong, or the benefits come after a few years of pain, it could be politically catastrophic. That's Bannon's big concern.

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We may well be in an AI bubble. But that doesn't mean AI won't transform the way we live and work, Axios AI+ author Ina Fried writes.

• Why it matters: Bubble talk is everywhere. Mentions of "AI bubble" rose 880% since last quarter's investor calls, according to AlphaSense.

"Some parts of AI are probably in a bubble," Google DeepMind CEO Demis Hassabis told Mike at our AI+ Summit in San Francisco last week. But, Hassabis added, "It's not a binary."

• "I, more than anyone, believe that AI is the most transformative technology ever. So I think in the fullness of time, this is all going to be more than justified," he said.

🫧 Bret Taylor, OpenAI chairman and Sierra co-founder, acknowledged at our AI+ Summit that there "probably is a bubble." But he said businesses, ideas and technologies endure even after bubbles pop: "There's going to be a handful of companies that are truly generational."

• Such was the case with the dot-com boom. While companies like Pets.com and Webvan were washed away during the bust, Taylor noted that Amazon and Google grew from the rubble.

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Cheap Trick performs a KISS tribute at last night's Kennedy Center Honors.

• The honorees: KISS, the glam rock band formed in 1973 (represented by Gene Simmons, Peter Criss and Paul Stanley — absent lead guitarist Ace Frehley, who died in October at 74) ... country music icon George Strait ... Tony-winning stage and screen star Michael Crawford ... disco pioneer Gloria Gaynor ... and Hollywood powerhouse Sylvester Stallone.

🎸 During the tribute to KISS, a lone red guitar that emitted smoke was placed on stage in remembrance of Frehley, who was known for having a smoke bomb in his instrument. (AP)

President Trump, becoming the first president to come down from the box to command the stage, said the honorees are "among the greatest artists and actors, performers, musicians, singers, songwriters ever to walk the face of the Earth."

• Trump appeared on stage three times — to open and close the show, and after intermission. He also talked up each artist in videos that played before their tributes.

📺 The 48th annual Kennedy Center Honors will air on CBS on Tuesday, Dec. 23, from 8-10:30 p.m. ET/PT, and stream on Paramount+.

• Trump had said on Saturday that he was hosting "at the request of a certain television network" — and predicted the best ratings ever.

More photos ... Meet the honorees.

SIMI VALLEY, Calif. — President Trump "signed off on what we're calling the Golden Fleet" last week, Navy Secretary John Phelan told Axios' Colin Demarest onstage at the Reagan National Defense Forum.

• Why it matters: Exactly what the Golden Fleet comprises — or how it begins taking shape, let alone gets built — has been the subject of much expert speculation.

Phelan's response at the forum, hosted at the Ronald Reagan Presidential Library, offers military watchers their best glimpse yet at the purported future armada, which shares the shine of the administration's proposed hemispheric missile shield, Golden Dome. It includes, according to the Navy secretary:

1. An American-made frigate, different from the Constellation class that Phelan axed before Thanksgiving, which was based on a design adopted by the French and Italian navies.
2. Modernized tankers, oilers and logistics ships, which Phelan described on X as "unsung heroes."
3. "Quite a bit" of unmanned technology. Earlier in the conference, Phelan told reporters of a $392 million deal with drone-boat maker Saronic.

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Civil rights groups are increasingly concerned that AI's rapidly spreading physical infrastructure is deepening climate burdens for communities of color, Axios' Russell Contreras writes.

• Why it matters: Massive data centers require vast quantities of water, energy and land. Many of these centers are clustered in regions where marginalized communities already face higher levels of air pollution, industrial zoning and climate vulnerability.

Civil rights groups say these impacts resemble earlier patterns seen with highways, refineries and manufacturing: pollution concentrated where political resistance is weakest and property values are lowest.

• Northern Virginia — site of the world's largest data center hub — is seeing mounting resistance in Loudoun and Prince William counties, where Black families say the build-out is overwhelming their communities.

Keep reading.

Over half of U.S. homes (53%) lost value in the past year, Axios' Sami Sparber writes from Zillow data.

• Why it matters: That's the most since 2012 — but the vast majority of homeowners still "have plenty to feel good about," the real estate site says.

Many homeowners bought before prices surged in the early 2020s. As of October, the median home value had jumped roughly 67% since the property was last sold. Just 4% lost value.

• Keep reading.

Indiana, Ohio State, Georgia and Texas Tech locked in first-round byes in this year's College Football Playoffs.

• The first round starts Dec. 19 with Oklahoma facing Alabama. The National Championship is Jan. 19.

The other side: Notre Dame was the first team left out of the playoffs — passed over in favor of Alabama and Miami.

• The Fighting Irish responded by withdrawing from consideration for any other bowl, including turning down an invitation to play in the Pop-Tarts Bowl in Orlando.

Go deeper ... Irish snubbed ... Full bracket.