DC lobbyist Zak Kukoff on why data centers are becoming a top political issue ahead of 2028

Speaker 8: That's a

Speaker 1: new exit.

Speaker 2: Our next guest is live here in the TBPN UltraDome with us, Zach Kukoff. Thank you. Welcome. Thanks for having me.

Speaker 1: Telling

Speaker 2: Welcome to the show. How you doing? Thank you.

Speaker 7: Thank you.

Speaker 4: For you guys.

Speaker 2: It has been far too long since you've been on the show. Last time, we were talking

Speaker 1: Why are you in

Speaker 2: Beautiful.

Speaker 1: Why are you in LA? Why is a man like you in Los Angeles?

Speaker 8: What does a man like me have to gain in Los Angeles? A nice tan, a little relaxation. Everyone

Speaker 2: who's joined the show has been outside. I mean, a few people, but it's spring is fully in.

Speaker 8: It's beautiful.

Speaker 2: Yeah. In in full swing. Did you get snowed in in DC? Did you go crazy blizzard?

Speaker 8: We had Snow Creek. So we were

Speaker 2: Snow Creek. What's that?

Speaker 8: Snow Creek, I had never heard of this before. Washington Okay.

Speaker 2: It's the

Speaker 8: only East Coast city

Speaker 2: Yeah.

Speaker 8: I've ever seen. They haven't figured out how to plow snow. Okay. Because the snow here's the problem with Washington.

Speaker 2: Yeah. The

Speaker 8: snow lands, everybody just sits there and there's a wait for it to melt. Okay. So their only plan is to like help it gets warm.

Speaker 1: Work smarter, not Yeah.

Speaker 8: Except neither. They just let it sit there and it didn't melt and it stayed really cold for a week and it merged into like a weird hard soft hard soft, the water and the snow and somebody who's smarter than we can do like chemical But basically, once it melts and freezes over like four times in a row

Speaker 2: Yeah.

Speaker 8: It becomes this thing called snow creep and you're basically stuck and you can't leave your house. So we couldn't like drive basically for the better part of like two weeks.

Speaker 2: It was Brutal.

Speaker 8: Brutal. Yeah. It was wonderful.

Speaker 2: But how is business broadly? Reintroduce yourself. Re re re describe your role and then we can go into some of the hot topics.

Speaker 8: Yeah. Yeah. Okay. I run a lobbying firm.

Speaker 2: Yeah.

Speaker 8: A lobbying firm. I run the tech practice of a lobbying firm. Firm's called Lewis Burke. We do science, tech, education. Wow. That's so nice. Wow. That should be in every room I walk into. They should always applaud for me. We do science, tech, education, health care. Dude. I'm from the tech side of the house.

Speaker 2: Yeah. Exactly. You're like I was watching you

Speaker 4: guys on the way over.

Speaker 2: Maybe the

Speaker 1: most like straightforward explanation. I really like jazzed

Speaker 7: it out.

Speaker 1: I was

Speaker 4: like really

Speaker 8: into it. Anyway, I run the tech side of the house. So I lobby for venture firms. I lobby for private equity. I lobby for high net worth individuals mostly who come out of venture private equity. And then I lobby for a whole bunch of tech companies.

Speaker 2: And specifically on the federal side?

Speaker 8: On the federal side. That's right.

Speaker 2: So we

Speaker 8: do everything at the federal level.

Speaker 2: So give me your sort of postmortem on big beautiful bill. That was the last thing we talked about. Yeah. Wow. What were the key decision points? I know that the government was shut down for a while. There's a lot of back and forth.

Speaker 7: Like, how

Speaker 2: did this all shake out?

Speaker 8: Okay. Basically, every this is it didn't used to be this way.

Speaker 2: Yeah.

Speaker 8: It used to be in Washington that things operated. I wouldn't say smoothly. But like go back to the nineties, West Wing optimism

Speaker 2: Yeah.

Speaker 8: Newt Gingrich contract with America, Bill Clinton, like Yeah. Yeah. We get a sound effect for that one. That's nice. I think it's pretty function pretty well. Now in Washington, basically every time something happens, it sets up the seed for the next issue. It's like if you only had the Treaty of Versailles over and over and over again. Okay? So big beautiful bill comes out. Yeah. It happens after big beautiful bill. You lead up to the big conflict which is around homeland security, ICE, and enforcement. Sure. And you basically have a variety of issues that come out most recently. You guys I'm sure were tracking

Speaker 2: Yeah.

Speaker 8: Christine Ohm out Yeah. Right at DHS. Yep. Others may be coming out soon too. Right? You know, AG, many others in the case too. A lot of this stems from the inability to get the entire government funded. Right? Big beautiful bill and by the way, reconciliation reconciliation as a whole Mhmm. Guaranteed funding for border enforcement for ICE. Right? So when the Dems later come back and say, hey, I wanna be able to stop some of these things that are happening in Minnesota and things like that.

Speaker 2: Yeah.

Speaker 8: The only lever they have to pull is to stop funding DHS as a whole.

Speaker 7: Sure. That's why you get

Speaker 8: these airport shutdowns. Yeah. That's why you get these super long lines at TSA and so on and so forth.

Speaker 2: Yeah. But from a tech perspective Yeah. How many like, all of that, like, flows through to whatever tech leaders want to happen in Washington just is slower. But what was on the top what's on the top of the the the stack in terms of to dos in Washington for Silicon Valley broadly

Speaker 8: these days? Mean, I will tell you it's less of a policy to do and the biggest political issue right now is probably the data center stuff. Yes. You guys are, I'm sure, tracking. I'm sure people aren't talking about Yep. You saw the thing in Indiana. Yeah. Right? City councilman. It was horrible. Yeah. Terrible. I had 13 shots in his house. Yeah. Okay. Putting aside how horrible that was Mhmm. There is like a very broad bipartisan emerging consensus Mhmm. That data centers rise energy costs Yep. Water and all sort you know, create pollution and whatever. You saw, like, they, you know, increase heat temperatures for, you know, parking lots. A lot of that's not true Yeah. But because the perception of it Yeah. Is real. Yeah. You have this big, huge armed, basically, opportunity for candidates who are populist sometimes, but opportunists always to come in and run on that issue in '28.

Speaker 7: So the

Speaker 8: big the problem with tech right now in DC is you have a bunch of tech money coming in. You guys know Leading the Future is the OpenAI associated super PAC. Sure. And public action or or public first, something along those lines, is the Anthropic Alliance super Both have been putting tons of money into races like New York twelve

Speaker 6: Mhmm.

Speaker 8: I think with Flores. Right? Mhmm. All sorts of people who have been either pro or anti data center and AI development as a whole Mhmm. There are now hundreds of millions of dollars of tech money

Speaker 7: Yeah.

Speaker 8: Going to try to arm those. That's the big issue for tech. Like, you want to get anything else done

Speaker 2: Sure.

Speaker 8: You basically are saying, how do I play now in midterms, but also looking ahead to '28. Yep. Even if I'm not talking about data centers directly, to make sure my preferred candidates get in to actually open the doors for the things I want to be able to do.

Speaker 2: Yeah. And how much of the data center question is about research education on those issues? Like there there was a full back and forth on the water issue. I think that one landed in a pretty good place with energy less so because no one debates that these data centers use a ton of electricity. I mean, they're measured in electricity. That's how we refer to how big they are. It's a gigawatt or a megawatt or

Speaker 8: Well, it's it's a proportionality problem.

Speaker 1: Right?

Speaker 8: Like the data center issue is, yeah, do they use a lot of electricity? Sure. Yeah. But in comparison to things like growing almonds Yeah. Right, or raising a cow

Speaker 6: Sure.

Speaker 8: It's actually not that much. And it turns out we love cheeseburgers and we find cheeseburgers like have huge value in America Sure. And so we accept the trade off that in order to have cheeseburgers, we have to pay a little bit for electricity. Yeah. Right? It turns out there's a lot of value in AI. By the way, this is not a winning political argument. I wouldn't go up and down and make the argument that, hey Yeah. Everyone's gonna have to get used to paying little bit more to pay for AI.

Speaker 5: No one wants that.

Speaker 1: No. Who who

Speaker 8: would want that?

Speaker 2: And that's the backbone of the ratepayer protection pledge. Correct?

Speaker 5: That's right.

Speaker 2: That's right. How is that going? Because that is a pledge right now

Speaker 6: Yeah.

Speaker 2: But it feels like it could be codified into law at some point.

Speaker 8: I don't know that I'm super bullish on it being codified, what I'll tell you is anything that tech can do Mhmm. To get in front of the issue like, you guys know the account on Twitter, More Perfect Union? Yes. Okay. I think they are the most effective messengers, by the way, in politics today.

Speaker 5: Sure.

Speaker 8: They have one narrative they push, it's very, very well done, which is look at these great local small towns, salt of the earth people fighting back against the evil tech firms who want to do things like build data centers. Right? And so the more that you see that and the more salient the issue becomes, and it's already so salient as it stands today.

Speaker 2: Yeah.

Speaker 8: You guys saw Leading the Future played in the sort of two Illinois races that just happened recently during the midterm cycle. They won one out of the two. If you look at what they ran on, in neither case do they run ads saying, we love data centers. Please fund data centers. Right? The ads were about saving democracy and it's great to have Jesse Jackson junior and the other candidate and so on and so forth. Like the more the tech can come out and ahead of these things and then change the topic to the variety of other issues voters care about Mhmm. The better position we are in. The more that we just try to take this on because we don't need thirty more years. Right? We need to have a window of time Mhmm. Where we can come in and get data centers built and actually start to operationalize a lot of the future value of AI. Mhmm. If you wait too long, there's a window where our adversaries pull ahead of us and the opportunity for American AI to dominate goes away. And if we're if we're too aggressive, right, the other inverse of this is we risk really alienating a lot of the communities that are local.

Speaker 7: So you need

Speaker 8: to thread the needle on getting out ahead with things like the pledge, right, Making sure we can come out and show that we're listening to constituent needs while also at the same time actually delivering on some of the positive benefits that are not just more doom around AI is going to take your job and kill your horse and burn down your house and whatever. Sure.

Speaker 1: What what has messaging been like around the the bent like, I I think for a lot of people they're like, okay, data center in my area Yep. What does it do for me? Yep. They're like, am I still going be able to use LLMs or video models? They're even if it doesn't go in, they're like, yes. So okay. So what what are you gonna do for me? Yep. And so I think like one of the best one of the best arguments for it today has been like tax revenues. Is there any is that can be, you know, repurposed for a bunch of other things. Seems to be pretty significant based on some of the numbers I've heard. But Yeah. Is that kind of messaging resonating or are people still just saying, you know, flat out not not in my backyard.

Speaker 8: Yeah. It is I would say it's very NIMBY. I don't think the tax stuff is breaking through to people and the reason it's not breaking through in part is because for every person like you and me and John who says, of course, these things are gonna throw off cash. How could you not look at them and think you can fund an entire school district Yeah. With one data center. Right? You have somebody else who goes, well, that doesn't logically track to me because you have five employees manning these things and they're gonna be more and more automated as time goes on. And more to the point, why not put them somewhere else? We're gonna have to deal with it and see the negative externalities. Like, the messaging thing that tech hasn't figured out yet, and partially we do it to ourselves. Every time you have somebody come out and say, AI is gonna take your job, it's gonna totally disrupt society, it's gonna end. You didn't have the people who built NAFTA weren't selling NAFTA by saying, hey, NAFTA's gonna ship all of these jobs overseas and be horrible. And by the way, NAFTA, whatever you think about it, did set up the conditions for a lot of jobs moving overseas. Yeah. Like tech has to get out of its own way a little bit and stop saying things even if there is some some tail chance of it being true. Like we've left the context bubble. Right? We're not in I I lived in SF for seven years. Like we're not in Berkeley right now where we're having a great conversation in front of the light cone or whatever and having some in-depth intellectual discussion.

Speaker 2: Yeah.

Speaker 8: We're in persuasion mode, and you can't come out and say that.

Speaker 2: Yeah. What about the just taxes broadly? Because

Speaker 6: Mhmm.

Speaker 2: When I hear a data center will throw off a lot of taxes, I think, well, maybe corporate taxes wherever that company is headquartered. Yep. And they'll certainly pay real estate taxes. Yep. But it's a very small real estate footprint. And so are there any local local regions that have figured out how to rethink the tax base to actually capture some of the value and say, look we're down but you're going to have to pay and here's the actual deal and let's let's about it more in those terms to make sure that we're actually internalizing the value.

Speaker 8: In some ways you're a Georgist. Right? You're like Yeah. I'd like to have a land value tax.

Speaker 2: Yeah. Yeah.

Speaker 8: Yeah. If we just capture some of the improvement we've created Yes. Which I'm very sympathetic to. Yeah. I hear the argument. The big tax conversation today, it's been a little bit back and forth. And the back and forth has been between some people who are saying, hey, we need tax breaks to lure in data centers. Like, for all that we hear about local community hates data centers, there's a huge swath of like offline people who are saying things like actually I would like to have any job in Right? My Interesting. I'd love to have any good construction job. Yeah. Yeah. Any job running these things. Yeah. So that's okay. So one side of the issue is Okay. Do we have people who are saying we need tax breaks or tax incentives to lure? Right?

Speaker 6: Yeah.

Speaker 8: Yeah. And and that's actually a wedge issue even within Republicans too, by the way, who say, hey. Some of whom say, hey, you're putting this in my backyard. You're destroying the character of my community. Very sort of the classic NIMBY arguments we've heard. And some of whom are saying things like, gosh, I would love to have more industry in my community. Okay. So that's one. The other side of it on the tax side are people who are saying, okay, we already have them. Right? And so what are the other things that we can levy? Sometimes it's land improvement. Sometimes by the way, it's a consumption tax on energy. Right? Okay.

Speaker 4: So you can

Speaker 8: actually like there are people who are saying, look, should we craft more narrowly targeted energy consumption taxes commercial in their orientation which is not a perfect And

Speaker 2: it's not something we've historically done because Correct. If I'm using energy to That's right. Do my dishes and you're using energy to not not watch Netflix, we don't typically put a value on that

Speaker 8: That's right.

Speaker 2: Differently, but maybe extraordinary circumstances require mean,

Speaker 1: many many have pushed for, you know, podcast tax. Taxing. Energy consumption.

Speaker 8: Podcasts are the backbone of America. Okay. We cannot tax them. Yeah. And so you see this back and forth in Georgia. Like, I would tell you

Speaker 6: Mhmm.

Speaker 8: Okay, Virginia, which is I think the largest concentration of data centers in the country, in part, the reason Spanberger, the Democrat, won the new the recent gubernatorial race in Virginia Mhmm. Is because she campaigned on the sort of very kitchen table issue of your energy cost has gone up.

Speaker 2: Yep.

Speaker 8: I am going to do the things to make it go down. Yeah. One of which is slow down data centers. Right? And in Georgia, if you look there right now, I would tell you the best chance the Dems have of flipping the Georgia gubernatorial race in the last twenty something years is running on they, by the way, they flipped some of the Georgia Public Utility Commissioner seats, which are like super nerdy, low salience, but they flipped them on this question of, I am paying more for my energy. I don't want that to happen. How do we prevent these data centers from going on? So it's it's a big problem. And the super PACs are doing a good job, but they could be doing a lot better of a job of articulating, by the way, non AI related messaging Yeah. To support AI candidates.

Speaker 2: What about zooming out to just energy broadly? Because I feel like, well, the AI companies might be and the tech companies might be narrowly focused on data center construction, a lot of them do have bets in solar and nuclear, and a lot of venture capital firms have funded solar and nuclear efforts. And that feels like potentially a more pro bipartisan issue. How do you see that breaking? How do you see the like, when we talk to nuclear founders, we get extremely excited, and then they give us their timelines. And it's like, it'll be online in 2030. And I'm wondering if there's anything that the government can do to pull that Stop offering. Forward. Are there any efforts or any reframing? Like, if you were to put on your strategist hat on, like, how do we I mean, how do we just get excited about clean energy? Because that feels like it's longer term, but it's potentially the release valve for everyone makes everyone happy.

Speaker 8: So okay. I'll say two things. One, and I should disclose that we lobby on basically all these issues. So Sure. Everyone should just count appropriately

Speaker 2: Yeah.

Speaker 3: Yeah. Because I'm

Speaker 8: talking my own book.

Speaker 2: Okay.

Speaker 1: Yeah.

Speaker 8: One is you can think about what are the ways

Speaker 12: Thank you very much.

Speaker 2: Thank you

Speaker 8: very much.

Speaker 12: Thank you

Speaker 8: very much. One is we could think about what are the ways that we can co locate, by the way, data centers with currently stranded sources of energy. Right? So if have like, there's there's two components to energy. There's production and there's transmission.

Speaker 2: Yeah.

Speaker 8: And the government can do a lot. The federal government can do a lot on from both the research side

Speaker 12: Mhmm.

Speaker 8: And some of the permitting side on the construction consideration. Mhmm. The transmission side is a lot more nuanced and and sort of a boring conversation. But suffice it to say, like, there are very limited ways which federal government can really make a big, impact on transmission. Mhmm. And so you might think to yourself, okay. What are the ways where we can take places we've already built energy? Right? Everything from all of the above. Right? From nuclear to solar to coal to natural gas and build data centers where it already exists. Same thing, by way, that crypto mining did, right, for many many years. Call that door number one. Door number two is I am very bullish on nuclear and things of that nature and partially because we we do lobby for it. But also, like, if you're thinking about what are the ways in which nuclear moves forward, what you actually want is for the federal government to think about what are ways that we can centralize authority over permitting more and more. Mhmm. Because you don't want to have, like, the local permitting group up in arms saying, we don't want a three mile island. What you actually want is for, like, a much more centralized one stop shop authority.

Speaker 2: Sure.

Speaker 8: And so in that way, you're not you're call it industrial policy, call it big government, call it whatever you like, but you're getting back to the idea that the government plays a much firmer hand in actually driving where these things go over the short and medium term. Mhmm.

Speaker 2: Is the data centers in space thing bullish or bearish for building more data centers on Earth? Because it feels like a get out of jail free card a little bit. It's like Totally. Now that we can build them in space potentially Right. Let's just not build anymore here.

Speaker 8: Well, it's my position that America owns space too.

Speaker 2: Okay.

Speaker 8: Let's just start there for a second or at least a little bit of space. Yeah. Okay. In all seriousness, the honest answer is I find it hard to believe that the economics of building data centers in space flip before we have a government that needs, that is more flexible and more amenable to people who want to build locally. Like, part of the challenge is this. You saw the here's a quintessential example. Okay? The Germans get very excited about decommissioning nuclear energy. Right? They they have lobbied for it for years and years. They have the famous tweet you've all seen of the Green Party candidates, you know, announcing the shutdown of the last reactor. Then a crisis happens, in this case, Russia, Ukraine.

Speaker 2: Yeah.

Speaker 8: And suddenly Germany is saying, gosh, I wish we had nuclear energy. Any source of energy we would take today. K? You have the strait getting closed. You're saying to yourself, gosh, I wish we had any source of energy.

Speaker 2: I think oil is at 140 a barrel right now.

Speaker 8: Yeah. I don't know the exact, but that sounds

Speaker 1: about right. Where it was at when The Russian Ukraine

Speaker 4: Ukraine invasion.

Speaker 8: That's right. Okay. What's the common thread across all these different things? Government is reactive and people Yep. Are reactive to crisis.

Speaker 2: That's true.

Speaker 8: And so it is I don't you would never root for a crisis. You don't want a crisis to ever happen.

Speaker 7: Don't let it

Speaker 2: go to waste.

Speaker 8: But don't let it go to waste, to quote Rahm Emanuel. Right? And so you're far more likely to say, hey, what's what's more likely to me on a short medium time horizon? The economics of building in space rapidly flip possible, but I don't know how likely. Mhmm. Or something happens on Earth, and there are millions of things that could happen Yeah. Such that people now are newly incentivized to build and allow for building at home. Mhmm. And I hope it doesn't require a Sputnik moment. Right? I hope that by the way, another Sputnik moment because maybe DeepSeek was already one. Yeah. I hope that's not the outcome. But if it is, the outcome will be people are much more amenable to building, I think, locally here on Earth and in Thank

Speaker 2: you so much for coming on and breaking it down.

Speaker 8: Yeah. We appreciate you. I appreciate Congratulations, guys, again.

Speaker 2: And we will talk to you soon. Can you We have some breaking news. I can take you through while we bring in Thomas Laffont from CO2. The alley has officially been auctioned fully. The naming rights to Riley Walls' Alley have just sold to Notion for a $140,000.

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