U.S. Cuts Federal AI Funds for States with "Burdened" Rules

Overview of the White House’s New AI Action Plan

The White House has introduced a new AI Action Plan that aims to influence how states regulate artificial intelligence. This initiative suggests that federal funding could be withheld from states with what the administration considers “burdensome” rules on AI. However, the 28-page document emphasizes that well-crafted legislation is acceptable as long as it does not hinder innovation.

The plan highlights the importance of avoiding excessive bureaucracy in AI development, especially at the early stages. It was authored by key figures including David Sacks, the White House Crypto Czar, Secretary of State Marco Rubio, and Director of the Office of Science and Technology Policy Michael Kratsios. The goal is to ensure that AI remains a driving force for progress without being stifled by regulatory hurdles.

Under this guidance, federal agencies will evaluate each state's AI policies before awarding grants or financial support. If they determine that a state's regulations might weaken federal backing, they have the authority to cut or withhold funds. Additionally, the plan encourages the Federal Communications Commission (FCC) to review any state-level AI laws for potential conflicts with its jurisdiction.

Legislative Efforts and Political Reactions

Congress has also seen proposals aligned with the White House's approach. A House bill known as the “Big Beautiful Bill” would prohibit states from setting AI rules for a decade. Meanwhile, Senator Ted Cruz proposed a plan that would link federal funding to states that roll back strict AI regulations.

President Donald Trump has expressed strong support for the initiative, calling it the most significant move for a sector he believes will transform the global economy. He plans to sign orders directing the U.S. International Development Finance Corporation and the Export-Import Bank to promote American technology abroad. Additionally, any large language models used by federal agencies must meet neutrality and fairness standards.

Public Comments and Criticisms

The plan has been shaped by over 10,000 public comments, according to reports. Critics argue that the initiative favors big tech companies over the general public. Sarah Myers West, co-executive director of the AI Now Institute, stated that the plan was written by and for tech billionaires and may not serve the broader public interest. She emphasized that the administration's focus appears to prioritize corporate interests over the needs of everyday people affected by AI.

This approach contrasts with President Joe Biden’s 2023 executive order on AI safety and security standards. Trump revoked that order on his first day in office and issued a new directive promoting faster AI advancement while eliminating ideological bias and incorporating public feedback.

Expansion of AI Systems

The administration has also focused on growing America’s AI capabilities both domestically and internationally. Following his inauguration, Trump announced a joint venture called Stargate, partnering with SoftBank, Oracle, and OpenAI, to develop around $100 billion in data center resources. However, the project has faced delays for six months.

In May, Trump traveled with tech leaders to Gulf countries to secure AI infrastructure deals. He has also taken steps to influence AI development abroad. Initially, he blocked exports to Huawei and other Chinese firms to slow their AI progress. Later, he relaxed some restrictions on selling Nvidia and AMD chips to China, allowing U.S. companies to better compete.

Future Developments

As the AI landscape continues to evolve, the focus on regulatory frameworks and international collaboration remains critical. The White House’s approach reflects a strategic effort to position the United States as a leader in AI innovation while addressing concerns about corporate influence and public interest. The ongoing dialogue around AI policy will likely shape the future of technology and its impact on society.