At a Glance

  • Tennessee Republican Senator Marsha Blackburn said Monday evening that the revised Senate proposal to pause state-level artificial intelligence regulation remains "unacceptable."
  • Blackburn's unexpected stance is a significant blow to the efforts of the proposal's main sponsor, Senate Commerce Committee Chairman Ted Cruz (R-Texas), to consolidate support for a fragile compromise. The language was originally intended as an amendment to the Senate version of the sweeping tax and spending legislation already passed by the House.
  • "While I appreciate Chairman Cruz's efforts to find acceptable language that allows states to protect citizens from AI abuses, the current language remains unacceptable to those who need these protections the most," Blackburn said in an emailed statement. "This provision could allow big tech companies to continue exploiting children, creators, and conservatives."

In-Depth Analysis

Blackburn's remarks came after U.S. Commerce Secretary Howard Lutnick praised the updated language earlier that day,calling it a "pragmatic compromise" between Cruz and Blackburn.。

"Congress should support the Cruz provision to keep America leading in AI," Lutnick wrote in a post on X.

The Senate this week began debate on amendments to the sweeping tax and spending legislation designed to lay the groundwork for most of President Donald Trump's domestic agenda.

In May, the House narrowly passed its version of the bill, which includes a provision freezing state-level AI regulation for 10 years. Before the bill can be sent to the president for signature, either the House must pass the Senate version, or both chambers must resolve differences between their respective bills.

Under pressure from Trump, Republican leaders in both chambers are pushing to complete the legislation before the July 4 holiday, but the effort faces obstacles, including Democratic opposition.

"With every rewrite, Senate Republicans are making their bill more extreme, more tilted toward billionaires, and more hostile to people's healthcare and livelihoods," Senate Minority Leader Chuck Schumer (D-N.Y.) said in a speech on the Senate floor Monday.

Schumer said Senate Democrats would force "vote after vote on amendment after amendment, making Republicans go on the record."

Democrats have also challenged parts of the Senate version under the "Byrd rule," which is designed to prevent the Senate budget reconciliation process—used to streamline passage of priority tax and spending bills—from being used for unrelated policy changes.

On June 21, the Senate parliamentarian ruled that Cruz's AI provisiondoes not violate the Byrd rule, and therefore can remain in the bill, as CFO Dive previously reported.

Cruz's proposal would require any state wishing to receive a share of a newly created $500 million federal AI grant program to agree to pause AI regulation.

Among other modifications, the senator agreed to shorten the proposed pause from 10 years to five. He also agreed to exempt certain laws, including those aimed at regulating deceptive acts or practices, children's online safety, and protecting individuals' names, images, voices, or likenesses.

"This pause on heavy-handed regulation can be a win for American entrepreneurs, small tech companies, small businesses, and states like Texas," Cruz said in an emailed statement Monday.

The current proposal "preserves states' rights to protect consumers and content creators while not giving the left a backdoor to impose its woke social agenda through AI regulation," he added.

Meanwhile, 17 Republican governors on Friday urged Senate Majority Leader John Thune (R-S.D.) and U.S. House Speaker Mike Johnson (R-La.)to strip the AI provision from the bill before it is sent to Trump for signature.。

"As Republican governors, we support 'one big beautiful bill' and President Trump's vision for American AI dominance, but we cannot support provisions that strip states of their power to protect citizens," they wrote.