By James Erwin
On Saturday, Digital Liberty submitted comments to the National Science Foundation in response to their Notice of Inquiry on implementing President Trump’s AI executive order.
Our comments praised the Trump administration’s rollback of President Biden’s AI executive order, which imposed all manner of DEI and anti-competitive labor and corporate requirements on developers. Digital Liberty’s central suggestion was for the administration to work with Congress on passing a federal moratorium on state AI laws:
To cement a legacy that sets our country up for future success, the administration should get Congressional buy-in on its approach to AI. EOs can secure four years of policy; black-letter law can secure the next ten, twenty, or even thirty years of AI leadership…
Federal preemption has the potential to create a consistent legal environment for AI across all states. States are beginning to pass a patchwork of AI-related laws – ranging from bans on certain uses such as facial recognition to transparency or risk assessment requirements that vary by jurisdiction. This fragmented approach can raise compliance costs and uncertainties for AI developers and companies operating nationally. A federal law that preempts state AI rules could prevent burdensome regulations from stifling AI research and deployment.
We suggested that this be modeled on the Internet Tax Freedom Act, which Americans for Tax Reform was involved in passing back in the 90s. We included an analysis from the Congressional Research Service of the ITFA’s legality and how to write similar legislation to pass constitutional muster. This was accompanied by data showing the ITFA allowed the internet economy to flourish, growing GDP and creating good-paying jobs:
Data from the Bureau of Economic Analysis found that in 2021, the U.S. digital economy accounted for $3.70 trillion of gross output, $2.41 trillion of value added, $1.24 trillion of compensation, and 8.0 million jobs. Growth in price-adjusted GDP was 9.8 percent in 2021, greatly outpacing growth in the overall economy, which increased 5.9 percent.[1] In 2022, the U.S. digital economy added nearly $2.6 trillion in value to the overall U.S. economy.[2]
[1] https://www.bea.gov/system/files/2022-11/new-and-revised-statistics-of-the-us-digital-economy-2005-2021.pdf
[2] https://www.trade.gov/digital-economy-reporting#:~:text=According%20to%20the%20Department%20of,to%20the%20overall%20U.S.%20economy
We further argued that, based on analyses by Goldman Sachs and McKinsey, a similar preemption of AI regulation could achieve similar economic benefits. In fact, when combined with the Trump administration’s pro-growth agenda, permissionless innovation in AI could be the final ingredient to achieving the 3 percent annual GDP growth Secretary Bessent has set for the US:
Treasury Secretary Scott Bessent’s stated goal of 3 percent annual GDP growth has been just out of reach for over two decades as politicians consistently aim for it. To finally meet this ambitious target and usher in a true American Golden Age, and bury China’s communist system in the process, permissionless AI innovation may be the final ingredient. The administration’s agenda to slash regulations, shrink the federal bureaucracy, unleash energy production (both fossil fuel and nuclear), and make the 2017 Trump tax cuts permanent will all enable economic growth. All that is missing is a stimulant to either increase the workforce or boost productivity. AI will do the latter and may be just the push needed to get growth to the Golden Age target.
On the national security front, we again made the case that a strong, growing economy is the only way to counter the rise of China and keep our technology even or ahead of theirs. We finally argued that the Trump administration should retire Biden-era export controls on chips and GPUs for frontier systems since China is already capable of building its own frontier AI and we are only preventing our own companies from dominating the global market.
Read the full submission here.
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