President Trump’s controversial “Big Beautiful Bill” proposes a widespread AI-ification of the federal government, with billions in fresh funding for it.
H.R. 1, which is actually called the One Big Beautiful Bill Act, contains about a dozen AI initiatives, some of which have specific budgets, listed in the table below. Some descriptions are vague, like $250 million “for the advancement of the artificial intelligence ecosystem” at the Defense Department. But the major proposals involving the tech are “reducing and recouping improper payments under Medicare,” developing new capabilities at DoD, modernizing federal IT systems, and combatting the entry of narcotics across the border.
Elon Musk, who appears to be on an image-rehab tour after running roughshod over the federal government for months, is not a fan of the bill. He told CBS News that he’s “disappointed” because it increases the federal deficit substantially through tax cuts and other measures and “undermines” the work of the Department of Government Efficiency (DOGE), he says.
“I think a bill can be big or it can be beautiful,” Musk says. “I don’t know if it can be both. My personal opinion.”
The Congressional Budget Office (CBO) estimates that the bill would increase the federal deficit by $3.8 trillion due to the tax cuts.
Still, Musk’s xAI and rivals like Google, Microsoft, and OpenAI stand to benefit if they secure any of these federal AI dollars. One section of the bill, for example, calls on the government “to contract with a vendor of artificial intelligence tools and with data scientists” to implement tools that would help catch “improper” Medicare payments.
Another section calls for $500 million through 2035 to modernize federal IT systems, in part by deploying “commercial artificial intelligence.”
DOGE is already experimenting with AI tools. In March, it deployed an in-house AI chatbot and API at the General Services Administration.
10-Year Ban on AI Regulation
Jeff Bezos, Sundar Pichai, and Elon Musk at Trump’s inauguration. (Photo by SHAWN THEW/POOL/AFP via Getty Images)
If you asked yourself why Silicon Valley CEOs would hand over millions for President Trump’s inauguration and sit behind him as he took the oath of office, look no further than a provision in this bill that proposes a 10-year moratorium on state-level AI regulation.
As it’s written, the bill says that no “state or political subdivision” may “enforce any law…regulating artificial intelligence models, artificial intelligence systems, or automated decision systems during the 10-year period beginning on the date of the enactment of this Act.”
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The goal is to “remove legal impediments” and “facilitate the deployment” of AI. It aims to “streamline licensing, permitting, routing, zoning, procurement, or reporting procedures,” and make sure regulation does not require AI models to have specific design, performance, or data requirements.
Forty-eight states and Puerto Rico have introduced AI-related legislation, with 26 states adopting or enacting 75 new measures, according to the National Conference of State Legislatures. For example, North Dakota passed a law prohibiting the use of AI-powered robots for stalking and harassment. Arkansas passed a measure protecting copyright law.
In California, Gov. Gavin Newsom vetoed a bill that would have required large companies to “perform basic safety testing on massively powerful AI models.” Focusing on companies that have reached a certain size (many of which are based in the Golden States) could stifle innovation while leaving the threats presented by smaller models unaddressed, he said at the time. Newsom has been more open to security-related AI bills, one of which prompted a lawsuit from Musk.
Jake Karr, Acting Director of the Technology Law & Policy Clinic at NYU’s School of Law, tells the nonprofit Tech Policy Press that the moratorium is “overbroad and vague.” He concedes that “much of the state-level tech legislation over the past few years has been rash and misguided,” but argues that the feds “should not get in the way of states earnestly trying to make sense of emerging technologies and protect their residents.”
Matthew U. Scherer, senior policy counsel at the Center for Democracy & Technology, has a more dire warning: “The moratorium is so sweeping that it’s hard to imagine how any law that touches on AI or automated decision-making in any way could escape it.”
Republicans argue that a patchwork of state-level AI laws are hard for tech companies to navigate, particularly startups with limited resources.
“Imagine how difficult it would be for a federal agency that operates in all 50 states to have to navigate this labyrinth of regulation when we potentially have 50 different states going 50 different directions on the topic of AI regulation,” Rep. Jay Obernolte, a California Republican, said at a recent hearing, according to The Hill. “This is exactly the same circumstances that we are putting private industry in as they attempt to deploy AI.”
What’s Next for the ‘Big, Beautiful Bill’?
The House approved H.R. 1 on May 22 by a vote of 215-214. Two deficit-conscious Republicans joined Democrats in opposing the bill. It now moves to the Senate, where it faces an uphill battle, particularly among moderate Republicans concerned about Medicaid cuts.
The effort may also run into some procedural hiccups. Sen. John Cornyn, a Texas Republican, tells the AP that the AI moratorium may run afoul of the Byrd Rule, which holds that budget reconciliation bills should be focused on funding allocations, not specific policies.
Any big changes made by the Senate would then need to be reconsidered by the House before it’s sent to Trump for his signature. This week, amid Musk’s pushback, Trump noted that the bill has “got a way to go.”
About Emily Forlini
Senior Reporter
