We\u2019ve seen this before: fear, overregulation, and political hubris at the dawn of an economic breakthrough. Will we learn from history \u2014 or repeat its mistakes?<\/p>\n
In every era of transformation, one thing never changes: politicians panic.<\/p>\n
When the agricultural revolution spread through Europe and into the early American colonies, it upended social orders. Elites feared farmers with new tools would abandon the land. During the Industrial Revolution, steam power and factory machines were labeled threats to jobs and morality. And in the digital age, the rise of the internet was met with a flurry of federal blue-ribbon panels warning about everything from pornography to \u201ccyberspace addiction.\u201d<\/p>\n
Now comes artificial intelligence \u2014 the next great leap in human productivity \u2014 and the cycle is repeating itself. Only this time, the stakes are global, and the timeline is faster.<\/p>\n
Last week, the Trump administration released its AI Action Plan<\/a> \u2014 a significant course correction from the Biden years that scraps top-down federal control and embraces innovation through deregulation, investment, and infrastructure. It\u2019s one of the most pro-market approaches to AI policy we\u2019ve seen from any Western government.<\/p>\n However, while the plan\u2019s vision is mostly correct, it lacks a crucial protection: a federal moratorium on state-level AI regulation. That omission leaves the door wide open for 50 different states to suffocate innovation under 50 different bureaucratic regimes.<\/p>\n Artificial intelligence isn\u2019t a robot uprising \u2014 it\u2019s advanced computing, a continuation of decades of machine learning, data science, and automation. Like past revolutions, it is a general-purpose technology with a massive upside: from medical diagnostics to precision agriculture, logistics, and personalized education.<\/p>\n This is the beginning of a transformation on par with the printing press, the steam engine, and the internet. Yet like every leap forward, it\u2019s greeted with a mix of excitement and fear. And fear tends to invite government overreach.<\/p>\n Entrepreneurs don\u2019t know exactly what AI will look like ten years from now \u2014 but they have vastly more insight than politicians ever will, because they live in the feedback loops of real-time trial and error. Markets discover. Governments delay.<\/p>\n Just look at where capital is going: AI startups raised $104 billion<\/a> in the first half of 2025 alone \u2014 more than in any full year prior. Guggenheim analysts<\/a> expect even larger gains ahead as enterprise adoption continues to soar.<\/p>\n This may not be a bubble but a boom. And America is positioned to lead \u2014 if <\/strong>we don\u2019t regulate ourselves into stagnation.<\/p>\n Some may question whether the federal government has the constitutional authority to stop states from regulating AI. The answer is yes \u2014 when interstate commerce is clearly involved, as it is with nearly every AI tool, system, and application. From cloud infrastructure to multi-state model deployment to international data flows, AI is not a local matter. It\u2019s a global one.<\/p>\n The US Constitution empowers Congress to \u201cregulate Commerce\u2026 among the several States,\u201d and the courts have long upheld federal preemption in nationally integrated markets. In Gibbons v. Ogden (1824), the Supreme Court made it clear: when a state law interferes with the free flow of interstate commerce, the federal government has both the right and duty to act.<\/p>\n As James Madison wrote in Federalist No. 42<\/a>, the Commerce Clause was essential to \u201cguard against the many practices\u2026 which have hitherto embarrassed the intercourse of the States.\u201d That applies perfectly to today\u2019s AI patchwork.<\/p>\n While states have roles to play, they should not be left to erect legal walls around innovation or preempt national policy through fear and overreach. A temporary moratorium, while aggressive, would be both constitutional and necessary to ensure America doesn\u2019t fumble the biggest economic opportunity in a generation.<\/p>\n Fortunately, Trump\u2019s new Executive Order 14179<\/a> repealed Biden\u2019s restrictive EO 14110<\/a>, which had empowered bureaucrats to embed fairness checks and ideological audits in AI tools. That approach mirrored the EU\u2019s bloated AI Act \u2014 and would have ensured US developers got bogged down in red tape while China continued to advance.<\/p>\n The new federal plan rejects that path. It commits to:<\/p>\n This is the right vision. But without a preemptive strike against state overreach, it may be impossible to implement in practice.<\/p>\n The House-passed version of Trump\u2019s One Big Beautiful Bill<\/em> (OBBB) included a federal moratorium on new state AI regulations. That language was dropped by the Senate before final passage. The expected result is chaos.<\/p>\n In 2025 alone, more than 1,000 AI-related bills were introduced across all 50 states \u2014 up from nearly 700 in 2024, according to the James Madison Institute<\/a>. The National Conference of State Legislatures<\/a> confirms that dozens of those have already become law.<\/p>\n Here\u2019s the problem: these aren\u2019t coherent guardrails \u2014 they\u2019re preemptive policy panic.<\/p>\n This is not just regulatory noise \u2014 it\u2019s a threat to the scalability of American innovation. It fragments compliance and deters investment, particularly in open-source or startup environments.<\/p>\n Every time a new tool comes along that threatens old structures, lawmakers feel the need to \u201cdo something.\u201d But as Milton Friedman taught us, the government solution to a problem is usually worse than the problem.<\/p>\n In truth, the best response to AI fear may be no response at all \u2014 at least not yet. We already have laws on the books to address fraud, discrimination, theft, and safety. We don\u2019t need to build new bureaucracies to police speculative harms that may never materialize.<\/p>\n The biggest risk is not that AI goes rogue. It\u2019s that our political class chokes off its development with regulatory hubris.<\/p>\n The EU is already moving in that direction. And while China may look fast on the surface, it\u2019s doing so through central planning and repression, which ultimately stifles the kind of open innovation that gave the world the microchip and the internet.<\/p>\n America can still lead. But it must do so by trusting markets, not mandates.<\/p>\n Rather than preemptively outlawing AI tools in classrooms or forcing private businesses to submit models for approval, we should let parents, workers, students, and entrepreneurs decide what works best for them.<\/p>\n We don\u2019t need governors and attorneys general positioning themselves as AI overlords to score political points. We need an environment where knowledge creation is decentralized, experimentation is encouraged, and failure is an integral part of the process.<\/p>\n Just as in the past, those who fear the new are demanding power over it. But history tells us: the real danger is not the technology \u2014 it\u2019s the legislation that follows fear.<\/p>\n The Trump administration\u2019s AI Action Plan is a welcome course correction. It prioritizes innovation over regulation, removes ideological roadblocks, and trusts the market to do what it does best \u2014 discover, adapt, and grow.<\/p>\n But unless Congress follows through with a moratorium on new state AI laws, this moment of opportunity will collapse under a pile of conflicting mandates and political micromanagement. We can\u2019t lead the world while tripping over our own red tape.<\/p>\n We\u2019ve seen this before. Every great economic revolution \u2014 agriculture, industry, technology \u2014 was nearly smothered by fear and top-down control. We can\u2019t afford to make the same mistake with artificial intelligence.<\/p>\n Let\u2019s stop pretending politicians know what\u2019s coming next. They don\u2019t. Entrepreneurs have a better shot \u2014 not because they\u2019re perfect, but because they\u2019re accountable to reality, not to reelection.<\/p>\n Congress should act now. Delay the deluge of state AI regulation. Let existing laws do their job. And give this generation\u2019s innovators the space to build the future. That\u2019s how America wins the AI race \u2014 not with more government, but with more freedom.<\/p>\n The post Trump\u2019s AI Plan Aims High, But Leaves a Gaping Hole<\/a> was first published by the American Institute for Economic Research (AIER)<\/a>, and is republished here with permission. Please support their efforts.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" We\u2019ve seen this before: fear, overregulation, and political hubris at the dawn of an economic breakthrough. Will we learn from history \u2014 or repeat its mistakes? In every era of transformation, one thing never changes: politicians panic. When the agricultural revolution spread through Europe and into the early American colonies, it upended social orders. Elites …<\/p>\n","protected":false},"author":108,"featured_media":2324418,"comment_status":"close","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[59],"tags":[],"class_list":["post-2455125","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics"],"_links":{"self":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts\/2455125","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/users\/108"}],"replies":[{"embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/comments?post=2455125"}],"version-history":[{"count":1,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts\/2455125\/revisions"}],"predecessor-version":[{"id":2455126,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts\/2455125\/revisions\/2455126"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/media\/2324418"}],"wp:attachment":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/media?parent=2455125"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/categories?post=2455125"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/tags?post=2455125"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}This Moment Is America\u2019s to Lose<\/h3>\n
Can Washington Rein in the States?<\/h3>\n
The Trump Plan Is Pro-Growth, but the States Are a Risk<\/h3>\n
\n
State Capitols Are Legislating Blind<\/h3>\n
\n
Don\u2019t Let History Repeat<\/h3>\n
Let Parents and Entrepreneurs Lead<\/h3>\n
Give Innovation a Fighting Chance<\/h3>\n