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

has a stake in the game. Real private account ownership compounding in our best companies from birth. Very cool. So very very cool. Great work from Brad Gersonner. And otherwise, uh, we have some breaking news from TVPN, which is that we have partnered with Graphite. Uh, graphite. dev is the website.

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It is the platform trusted by 45,000 developers at top engineering orgs like Harvey Ramplet. Who else we got? We got a complexity Harvey Aana Data Dog for Da Dog the browser company Duck Duck Go. Let's go. A lot of them. But um if you're building on GitHub like I'm sure you are, go and get on graphite. Uh graphite.

dev dev is the website and we'll have to have Merryill the CEO on the show very soon but very excited to partner with them and um you know Tyler will be uh running our TVPN or on graphite as well so it more to come. Well we have our first guest of the show Zack Cukov for having me live from Mr.

Washington Washington correspondent Mr. Washington. I even set up I don't know if you can see that's great. Oh, that's the uh monument right there. Wow. No way. There we go. Beautiful. That's great. We'll just have our production team zoom in. Zoom in just on the monument so you won't be on camera. Perfect.

Just I'll get out of the way, but you can see the good stuff behind me. That's the important thing. So, yeah, break it down for us. The uh the Wall Street Journal has a story. Senate passes Trump's mega bill bill after all night session.

tax cuts and Medicaid spending reductions head to the House with a July 4th deadline reachable. What's interesting in the bill? How likely do you think it is to pass? What are the major reads on this? And then we want to get your your takeaway from like where the dividing lines are around the bill. Yeah.

So, there's a couple trip lines. Uh the first trip line, I would say you guys have been tracking the moratorum, the 10-year moratorum on AI development. This was the on AI regulation. This was the first it was in. Ted Cruz put it in, then it was out, then it was back in. There was a compromise.

There was a five-year agreement instead of a 10-year agreement. And Blackburn has been sort of a key driver of getting it back out again. It's out. Now it was done 99 to1 in the Senate, almost unanimous in the Senate to get this out. This was a big win for Daariothropic, probably the number one beneficiary.

And by the way, somebody who certainly used a fair bit of political capital pushing for this. That's fault line number one. I would say fault line number two. Stay on that. It's it's a it's a potential ban on AI regulation that was removed.

And so the current bill does not have a has a does not have a moratorum on regulation. So it's kind of a double moratorum on federal regulation. That's right. California.

Yeah, states, whatever, who want to Marcia Blackburn, her home state, Tennessee, passed last year something called the Elvis Act, which uh was cutely named, but basically said, look, if you are building like a, you know, an AI audio business, you cannot use any likeness of a real performer's sound.

So, if you want to have uh John singing the blues or Jory singing the blues, I cannot do that without a prior deal. That's because in Tennessee, Nashville is a dominant industry. The music industry is a dominant industry.

And so part of Blackburn's opposition to the moratorium, which would have prevented bills like that from taking effect, is that it ended up superseding the work that her home state has done to protect its dominant industries.

By the way, net net this moratorium, the time that they got to a compromise was so watered down really wouldn't have impacted Tennessee or California anyway. But it was a very dramatic swing from in, out, in, and now out once again for good.

And and what do you what do you expect uh at at the state level around AI safety going forward? Is this going to is the fact that this was removed going to inspire certain governors to say, you know, m make this a part of um their platform?

And I guess like I I want to know more about like if I'm 11 Labs and I'm and I'm training a voice agent and I can't be sure that some clip from, you know, Elvis or, you know, some Justin Bieber worked its way in there.

Uh, does that mean that I just turn off Tennessee at like the DNS level or do some geo fencing or or is it more risky than that?

um where I I have to I I have to comply kind of at the national level and they're kind of forcing me to comply everywhere or can I just pull back out of that state because we've seen this with with uh Apple intelligence not being available in China, not being available in Europe for example.

But yeah, what would the impact on something like that be? Well, think about states in two categories, right? There are some states that are so large and by the way the analog that I would think about here is what happens in the textbook market.

So if you're a textbook publisher and you want to write some textbook about biology or whatever, if the largest states in the country, this category one, pass a law mandating something needs to be in a textbook, suddenly you're going to comply nationally because they are so large they warp the market. Exactly.

You have to That's right. And so if California tomorrow says, "Look, we're passing a European style bill to severely curtail," which I think would be a disaster, to severely curtail AI development, that would in effect be a national bill.

And part of the, in my view, uh, mistake that's happening tactically right now is this self-imposed July 4th deadline is so restrictive that it forces all of these more nuanced negotiating points to fall by the wayside, right? It becomes blanket. Either it's in or it's out.

There's just not time to get to a more nuanced middle ground. So 11 Labs if Tennessee has the Elvis Act probably says look we just squirt around Tennessee.

I don't I haven't spoken to 11 Labs but if California passes then suddenly you have the whole country warped by this and Gavin Newsome and the California legislature are certainly ambitious enough to try as they did last session uh to try to pass something that would impact the whole country. Yeah.

Wasn't Wasn't there news out of California this week or or last week around some of this stuff? Yeah. Yeah.

There's there was a huge fight which had an unlikely set of bed fellows where you saw Andre and others leading the anti- legislative anti-regulatory brigade against some other folks who are much more pro- cretailing.

By the way, I I will just say the other interesting takeaway for tech, not to totally dovetail away from your question, but the interest other interesting takeaway for us, I think, in this is the deciding vote in the Senate on the overall package, the reconciliation bill was JD Vance.

And so if you're a Vans looking at 2028, right, you already see that Accaziocortez and others, AOC and others are going to use his deciding vote on this bill, which includes huge amounts of Medicaid cuts that Tom Tillis from North Carolina in particular thought were politically toxic as a wedge against him when he comes and runs for president in four years.

So sorry that was you didn't you asked a question about California and I dovetailed it back to the federal level, but that's the Yeah. Yeah. Yeah. That's the big uh the big shock. So, you asked about trip wires. The AI trip wire was one. Medicaid cuts, which are politically really toxic, right?

Because who wants the idea that you voted for the government to take away your healthcare? That's another huge trip wire. And then there's a package of things that maybe we care about that are nuanced, like for example, IRA tax incentives for clean energy, right? Or new taxes on wind and solar from China.

These are all things that might enrage the Republican the the very conservative Republican faction in Vig in the House which now has to still pass the bill and now complicates the negotiating posture because the Senate watered down the Senate preserved the IRA tax incentives and watered down some of the tax cuts, got rid of some of the tax cuts on Chinese imports, which means basically you have a bill that's actually financially harder to pass because it's less balanced.

And at the same time, you've now alienated a huge faction of the GOP. the super conservative GOP side of the party who still have to vote for the bill to happen. So, it's up in the air if it passes or not. Uh, can you tell me about the EV tax credits?

I know Americans are struggling more than ever to buy naturally aspirated V12s. I'm hoping that there's some move there to subsidize things like the Ferrari 12 cylindry, the Dol Trindi. It's a multi00,000 car.

Even if we can't subsidize that, maybe we can just take away the subsidies from electric cars to tilt the to tilt the playing field in favor of the of the larger engines, the supercharged V8s, the twin turbos, the G63s, these types of cars that Americans, you know, deserve to be driving.

So, what's the news on the EV credit front? I agree with you that the backbone of the American economy is the Ferrari, right? It's impossible to me to imagine a world. Thank you for the laugh track. I appreciate that. Where a bluecollar factory worker cannot own a sports car is beyond me. This bill doesn't address that.

I wish it did. Be great if it did. It's not going to solve that huge unsolved problem. What it will do, by the way, is continue to drive a wedge between Elon and Trump. Right? Then you saw Elon take the Twitter. I imagine you guys probably mentioned it earlier.

You saw Elon take the Twitter and start to really crusade against people voting for this. That is in part because at least the House version of the bill was much worse on a lot of the subsidies for electric vehicles than the Senate version. The big challenge is going to be going into now the conference committee.

It's going to be how do they reconcile these two challenges so that they can hopefully tilt the market back in favor of course of Ferraris and supercars nonetheless while also not alienating one of the two power centers of the GOP at least today in Elon who could easily primary somebody who votes against.

Yeah, that makes a lot of sense. What what what about uh how how are the Democrats feeling about EVs these days? Because it used to I used to feel like it was a Democratic cause to be pro-E incentive. Let's save the environment. Let's get people out of the gas cars.

I'm joking about the V12s obviously, but um but now it's become maybe let's punish Elon, but is this a cut your nose to spite your face situation for the Democrats? I think it's a rough spot. I mean, you guys remember when Elon wasn't invited to the big EV summit under the Biden administration, right?

That's part of what kicked off his political awakening is he he hasn't used unionized labor and so he was excluded from this EV summit.

There's been a huge polarization, a negative polarization against EVs among not only Dems in office, but the Democratic base, too, which is to all the points you brought up quite ironic. You're not going to find many Dems willing to cross the aisle in support of electric vehicles to save this bill.

This is a bill that will live or die by Republican whip count and Republican unity. If the whip count isn't there, it's going to be really hard to get it done before July 4th. What about uh Elon's America party? You think that's real or or just uh exciting? Uh are those my only two options? Real or exciting?

There's no door. There's no door number three.

Yeah, I mean it's obvious like you know we were talking earlier uh third parties haven't haven't historically done well well he has the America pack so when you say Elon could primary someone he could potentially primary a Republican on the Republican ticket with the American pack and he could almost like be kind of like a head fake like oh this is part of the America party but it's not really a third party.

Is that more what we're thinking here how this plays out? Yeah maybe maybe one historical analog. It's not perfect, but think about like a Theodore Roosevelt, like a Teddy Roosevelt with the Bull Moose Party, right?

You think about it's a faction within a larger established party to your point that can serve as an engine to primary people who are in disagreement over Exactly. Like the Tea Party or frankly what's happening now. Look at Zorona. MAGA is also like a wing of the Republican party. That's right. That's right.

MAGA, the Tea Party, and now on the left, the polarization from the Zoron and Democratic Socialist world. All of these folks are new factions in a way that by the way we haven't seen before.

The same way that 50 years ago you basically watched MASH on television that was your only option and now I tune into TBPN while I play Subway Surfers and have 30 other things hitting me at the same time. This is the political version of that, right?

Where you say, "Okay, it used to be my options were a platform that I accepted wholesale on the Republican side or the Dem side. Now I can be a MAGA guy. I can be a techright guy. I can be a populist guy and I'm a new right guy. And on the left I can be a democratic socialist. I can be an abundance bro.

I have an infinite menu of things. The America party is more likely if it sticks. One more menu on the side of the right. Sure. Sure. That makes sense. That makes a lot of sense. What uh what time what do you expect out of the next 24 hours? So, tomorrow morning at 9, House Rules Committee votes.

That's going to be a key vote to see how this thing does. What I would say is if this gets done by July 4th, the thing that you're going to have to look to is that 9:00 am Eastern vote to see how much unity is there in the Republican party.

They can barely lose any votes that this thing goes through the House in its current form. But I think it's unlikely that it's going to happen immediately. It'll happen. This will get passed. But on their timeline, I don't know.

In the next 24 hours, if you see more senators like Marowski from Alaska who are saying things like, "The bill is flawed. Please send it back to the Senate so we can work on it again. " That's a key indicator this thing may not have the legs it needs the next couple days.

Yeah, we heard about I mean everyone's saying like it's the biggest bill, there's all this pork.

Like are there any like green shoots where there's some random startup out there that's just super excited because maybe it's not a headline grabbing, you know, $10 billion thing, but it's like that's a hundred million that I can go after in energy or in defense or in ship building or anything.

Have you seen any of these? Like they're called riders, right? Yeah. Yeah. Yeah. It's a good question. Um Biden was famous for stacking a lot of these. Like the inflation reduction act had a million ways you could go participate. This one's got fewer. I'll say one funny piece of pork and I'll say one actual opportunity.

The real opportunity I would say is for fintech folks who are looking at the Trump accounts, right, which is giving huge amounts of new Americans who are underbanked or not banked before access to capital for the first time. If I'm Robin Hood, I am loving that's a big change for me. Funniest piece of pork in the bill.

Marowski, who was the key hold out in the Senate from Alaska, got a tax exemption for uh Alaskan native Alaskan uh whalers. She said basically native Alaskan whalers need to be Yeah, that was honestly big delivery for uh for her constituency of people who kill whales in Alaska. Let's give it up for the whalers.

They don't get enough attention in Washington. I mean, we've we've talked about this before, but you know, energy is really important for the AI data center race. Whales, they produce oil that you can burn. Sure. Wasn't it Chase who said he would he would burn whale oil? He didn't say he would do it.

He said that the hyperscalers are so desperate for energy right now that they would burn whale oil. It's more fun to think about Chase launching Crusoe for whales. VCs are the new whalers. Yes. Yes. They