Illustration: Aïda Amer/Axios
Those who helped kill the moratorium on state-level AI laws in the budget bill have been celebrating it as a victory, but there are much bigger fights ahead.
Why it matters: Congress wasn't able to ban states from passing their own AI laws. In the process, however, bridges were burned and tech priorities got scrambled.
- What happened this week is poised to complicate debates over federal tech policy, including kids' online safety bills, which have had broad bipartisan support.
Context: Sen. Marsha Blackburn's main motivations for killing the AI ban were her support of Tennessee's AI laws and her long fight to pass kids' online safety laws in Congress.
- Blackburn's ultimate burning of an alliance with Senate Commerce Chair Ted Cruz on a watered-down amendment may have ripple effects, sources close to the situation tell Axios.
- There's frustration with how it all played out on both sides of the aisle, and the outcome could complicate the future path for bills like the Kids' Online Safety Act in both the Senate and the House, those sources said.
What they're saying: "KOSA was already facing an uphill climb, but Blackburn backing out of her deal with Cruz has frozen whatever momentum was left," said Joseph Hoefer, lead AI lobbyist at Monument Advocacy.
- "When the lead Republican sponsor is seen as walking away from a hard-fought compromise with the chair of the Commerce Committee, it not only damages trust with the Senate but also with the House," he said.
The other side: The defeat of Cruz's AI amendment 99-1 shows there are cracks in his armor as head of the Commerce committee, a senior Democratic staffer said.
- The whole point was that Congress cannot preclude states from acting until federal laws pass, so now Congress must act, the staffer said.
- MAGA-world also has a clear split, which was exposed in this debate and ultimately weakened Cruz's crusade: Cruz and others who championed a ban that had the support of major tech companies versus influential populists like Steve Bannon and Mike Davis who called the ban a "clear giveaway to tech giants."
- It also isn't clear where everyone in the White House stood on the ban. Commerce Secretary Howard Lutnick posted his support on X, but President Trump never said anything specific about it, and was on the record as happy with where the bill ended up.
What we're watching: Republicans on E&C and senior House GOP leadership already had issues with how KOSA treats content, despite E&C Chair Brett Guthrie saying earlier this year he wants to keep working on it.
- The AI moratorium distraction may make it more difficult to get back to those conversations.
- In the Senate, we'll be watching to see which tech policy bills Cruz will schedule for markup.
- Blackburn: "I remain fully committed to working with [Cruz] and our partners on the House Energy and Commerce Committee to finally get the Kids Online Safety Act to the President's desk. Failure is not an option, and our children's lives are depending on Congress' ability to act."
