States with strict AI laws could see federal dollars withheld under Trump's new AI plan

The Trump administration's new "AI Action Plan" recommends withholding federal funding from states with "burdensome" AI regulations.Andrew Caballero-Reynolds/AFP via Getty ImagesThe Trump administration released an "AI Action Plan" on Wednesday.It proposes withholding federal funding from states that have "burdensome" AI regulations.Republicans previously tried to ban states from regulating AI via the "Big Beautiful Bill."The Trump administration really doesn't want states to go hard on AI regulation.Tucked into the White House's new "AI Action Plan," released on Wednesday, is a proposal to limit AI-related federal funding to states that impose "burdensome" regulations. The plan argues that doing so would be wasteful.At the same time, the 28-page document leaves room to allow states to continue regulating AI in some form via "prudent laws that are not unduly restrictive to innovation.""AI is far too important to smother in bureaucracy at this early stage, whether at the state or Federal level," reads the document, which was authored by White House Crypto Czar David Sacks, Secretary of State Marco Rubio, and Office of Science and Technology Policy Director Michael Kratsios.The plan says that federal agencies will "consider a state's AI regulatory climate when making funding decisions" and "limit funding if the state's AI regulatory regimes may hinder the effectiveness of that funding or award."It also recommends that the Federal Communications Commission review states' AI laws to see whether they interfere with the agency's authority.Republicans previously tried to do a version of this via the "Big Beautiful Bill." The House version of the bill would have outright banned states from enforcing AI laws for 10 years, while a proposal by Republican Sen. Ted Cruz of Texas would've tried to accomplish the same thing by conditioning federal funding to states.That provision was met with internal GOP resistance and was ultimately stripped out of the bill in a 99-1 vote before it passed.In addition to pushing for lighter regulation on AI, the administration's action plan also called for quicker development of AI data centers and the promotion of American AI technology abroad to counter Chinese influence.The plan is likely to be received well by the tech industry broadly, which has pushed for lighter regulations.On Wednesday, IBM Chairman and CEO Arvind Krishna praised the plan, calling it a "critical step towards harnessing AI for sustained economic growth and national competitiveness.""IBM applauds the White House for its bold and timely AI Action Plan, which prioritizes open innovation, strengthens US technological leadership, and proposes a supportive regulatory environment for AI development and deployment," Krishna said in a statement.Read the original article on Business Insider

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