On Wednesday, rumors began to spread in Washington about a significant policy change: It was said that the White House would issue an executive order on Friday that would ultimately eliminate state AI laws, handing those regulatory powers over to the federal government. As soon as it leaked online, lawyers and policy makers started scrutinizing every sentence of it. There was much in it that seemed politically unfeasible; There was much more that seemed widespread, possibly illegal. There were many agencies that were suddenly removed.
But crucially, they saw just how much power would have been handed over to a certain South African tech-billionaire-turned-special-government-employee who had made his way into the West Wing — not Elon Musk, but Other One.
In each section of the draft order, President Donald Trump was directing his Cabinet secretaries and agency heads to issue reports and guidance within the next 90 days on how to punish states with AI laws. In the case of the Attorney General, he had 30 days to set up an entire legal task force to prosecute those states. Each of them will have to consult with David Sachs, a special advisor on AI and crypto and one of the most influential tech venture capitalists in the world, when executing orders.
“I don’t want to say this was a power grab. That’s too strong a word,” said a technology policy adviser close to the White House. “But it’s definitely a consolidation of his power.”
The MAGA universe exploded instantly war Room Host Steve Bannon – who managed to help defeat a previous attempt at an AI halt in the Senate this year – devoted part of his Friday show to the draft order. Democrats in Congress rebelled publicly; Republicans skeptical of the technology were quietly preparing their statements. The AI policy world quickly released reports detailing how much power may have been sucked into the hands of the White House. The order was supposed to be signed on Friday – and then it never happened.
Outside the White House, the AI executive order, had it been signed, would have been legally unenforceable. But inside the White House it will be treated as a royal mandate. Trump’s executive orders have historically been designed to force his subordinates to carry out his will ImmediatelyLegality be damned, and the outcome becomes irreversible by the time the courts find his actions illegal. For example, his tariff order may soon be overturned by the Supreme Court, but not before it causes trillions in economic losses and damages America’s international relations. (The White House did not respond to a request for comment.)
And from there it would be used as a threat against states. “I suspect that if it is effective, the most effective part of it will have a chilling effect on state law,” said Charlie Bullock, a senior research fellow at the Institute for Law and AI. The Verge. A section of the draft would have allowed the government to pull any federal funding from states violating the order — not just rural broadband grants, which were used as leverage in previous waiver battles, but anything from highway funds to education grants. “Even if [a state] Even if someone can win a court case it will take a long time for them to eventually get that money. States can be assured of this.
Thus, this would have turned Sachs into America’s AI policy gatekeeper in one fell swoop.
Although there are several White House officials with connections to the tech industry, Sachs, who has temporary government employment status, is seen by Washington insiders as Trump’s closest conduit to big-name tech CEOs who consider him a peer. (Although Vice President J.D. Vance worked in Silicon Valley before politics, he never got into the three-comma club.)
“He’s trying to maintain America’s competitive edge in the big picture, and you could say, in a more selfish way, he’s trying to protect the tech industry [with] a more narrow, these are my people approach,” said a close White House technology policy adviser.
But Sachs was also trying to neutralize a third, internal threat: political forces within the executive branch, both the progressive left and the hardline MAGA right, bent on curbing his influence.
Even in this hyperpartisan environment, left and right share a common cause in regulating the excesses of Big Tech, and will even join forces to publicly oppose them. And apparently this happens behind the scenes too. As one tech policy advisor described it, the informal internal anti-sex coalition included holdovers from the Democratic Biden administration “who were over-regulating and wanted to break up tech companies,” and hard-right MAGA officials in his current administration “who don’t trust tech, and likewise want to regulate technology companies — either at the state level or the federal level — and bring them to their knees.”
According to those who analyzed the bill, it was revealing which institutions have been completely closed.
The first step observed by technical policy experts was to identify who was excluded. In 2023, President Joe Biden’s massive AI executive order empowered a wide range of agencies to develop AI policy, and most – if not all of them – were suddenly absent. For example, the National Institute of Standards and Technology (NIST) was assigned to conduct research on AI risk management, assessment, and standards development. (Coincidentally, those concerns were recently included in California’s AI safety law—a law that the AI industry has staunchly opposed.) Also missing: any mention of the Office of Science and Technology Policy (OSTP), which centralizes the administration’s technology policies in one place before they are brought to the president; Cybersecurity and Infrastructure Security Agency (CISA), the DHS agency that focuses on national security Internet threats; Or the Center for AI Standards and Innovation (CAISI), whose name itself speaks volumes.
“Perhaps in practice, David Sachs will consult them and [Office of Legislative Affairs] “They may be communicating with them,” said Ricky Parikh, policy director of the bipartisan Alliance for Secure AI and a former Biden administration lawyer. “But not listing them is surprising.”
Instead, the proposed moratorium would have been enforced by four agencies: the Justice Department, which would have sued states in violation of the order; the Commerce Department, which will analyze which states may lose their broadband funding; the Federal Trade Commission, which would have investigated which states might have engaged in “deceptive conduct” based on ideological bias; and the Federal Communications Commission, which would have developed a federal AI reporting standard.
Naturally, all will be advised by Sachs – and they all now have the power to write AI laws or adopt ways to punish states that do not implement them.
Populist Republicans, especially in the MAGA base, immediately saw how much influence Sachs had over the entire order, and how much of a threat the order would pose to any state. Although they briefly aligned with the tech right to get Trump elected, Republicans have increasingly attacked their allies over the stark ideological mismatch: They believe AI is a threat to conservative family values and will steal American jobs, they are allergic to federal intrusion into states’ sovereignty, and have a general disdain for how quickly tech CEOs moved from supporting Democrats to supporting Trump. Many red states have begun writing their own AI rules, and governors like Ron DeSantis of Florida and Sarah Huckabee Sanders of Arkansas have openly expressed their dissent against the moratorium. Even Trump’s open support of the moratorium has not impressed the base.
“From a purely political strategy standpoint, the base of the Republican Party is not on board with David Sachs [fellow VC and Trump supporter] Marc Andreessen on this. “They absolutely are not,” said Brandon Steinhauser, a longtime Republican strategist and CEO of the bipartisan Coalition for Secure AI. And I don’t think they care because that’s just the way they are, It doesn’t matter to us. We are here to get what we want and there are three years left in this administration, We were Harris and Biden and Hillary supporters, and then we became Trump supporters because it’s convenient.,
Little did the AI world expect that MAGA would immediately try to bring them to their knees, even joining forces with progressive anti-tech factions in the government, and their aggressive Silicon Valley approach via executive order may have widened the rift further. But this was enough for them to retreat temporarily. The following week, a new rumor spread in Washington that the administration would sign an AI-related order, and they did — but for an entirely different, non-preemption, very undisputed project directing national labs to engage more with AI development.
The Special Advisor on AI and Crypto was mentioned only once.
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