Zak Kukoff: Senate removes 10-year AI regulation moratorium from Big Beautiful Bill in 99-1 vote

Summary

The Senate voted 99-1 to strip a 10-year AI regulation moratorium from the reconciliation bill, ending a protracted back-and-forth that saw the provision inserted by Ted Cruz, removed, reinstated as a five-year compromise, and finally killed outright. Marcia Blackburn was the decisive force behind its removal, motivated in part by protecting Tennessee's music industry law, the Elvis Act, which bars AI audio products from using a performer's likeness without a prior deal. The moratorium's removal is characterized as a significant win for Anthropic, identified as the primary corporate beneficiary and a heavy spender of political capital on the outcome.

The broader regulatory picture now hinges on the states. Without a federal moratorium, California becomes the critical variable. If Gavin Newsom and the California legislature pass European-style AI restrictions, the market distortion effect would be national, mirroring how large-state textbook mandates force publishers to comply everywhere. Smaller-state laws like the Elvis Act can be geofenced around; a California law cannot.

JD Vance cast the deciding vote on the overall reconciliation package, a move that opponents including Alexandria Ocasio-Cortez are already positioning as a 2028 liability, given the bill's Medicaid cuts that Tom Tillis of North Carolina publicly called politically toxic.

The bill now faces a difficult House passage under a self-imposed July 4th deadline. The Senate version preserved IRA clean energy tax incentives and softened cuts on Chinese imports, alienating the House's conservative faction while also fueling Elon Musk's public campaign against the bill. The House version was materially worse for EV subsidies, and the conference committee reconciliation remains unresolved. Republican leadership can afford almost no defections.

The 9:00 a.m. Eastern House Rules Committee vote is the immediate signal to watch. Senators like Lisa Murkowski of Alaska publicly calling the bill flawed and requesting it return to the Senate would be a leading indicator of collapse on the current timeline. Zak Kukoff expects the bill ultimately passes, but not necessarily by July 4th.

On the fintech side, the Trump accounts provision, which extends investment account access to unbanked Americans, is flagged as a concrete commercial opportunity, particularly for platforms like Robinhood. The standout piece of legislative pork: Murkowski secured a tax exemption for native Alaskan whalers as part of the price of her support.