As the United States races to secure its position at the forefront of artificial intelligence technology, a fierce debate over regulation and innovation is unfolding across federal and state governments. The White House’s recent AI Action Plan, released in late July 2025, aims to accelerate AI innovation by dismantling regulatory barriers, streamlining infrastructure development, and promoting U.S. dominance on the global stage. Yet, this federal push for a business-friendly, innovation-first approach is clashing with growing calls from states and advocacy groups for stronger safety measures and accountability in AI deployment.
The White House plan, applauded by tech giants like IBM CEO Arvind Krishna, focuses on reducing burdens imposed by regulatory frameworks. It directs agencies such as the Office of Management and Budget (OMB), the Federal Communications Commission (FCC), and the Federal Trade Commission (FTC) to ease restrictions that could stifle AI development. For instance, OMB is tasked with collaborating with agencies that manage discretionary funding to consider states’ regulatory climates, potentially limiting funds to states that impose restrictive AI regulations.
Central to the plan is the overhaul of permitting processes for AI infrastructure, including data centers, semiconductor manufacturing, and energy grids. The administration proposes new categorical exclusions under the National Environmental Policy Act to fast-track projects deemed to have minimal environmental impact. Additionally, workforce development is a priority, with departments such as Commerce, Education, Energy, Labor, and the National Science Foundation partnering with local governments to create training programs tailored to AI infrastructure jobs.
On the international front, the plan emphasizes strengthening U.S. AI technology export controls to prevent adversaries from accessing advanced AI chips. Agencies like Commerce, the Office of Science and Technology Policy, and the National Security Council will employ location verification features embedded in chips to ensure they do not operate in restricted countries. Omaar, a policy analyst, noted, “The plan rightly recognizes that beating China demands a comprehensive effort — unleashing infrastructure to fuel model development, removing regulatory frictions that slow development and deployment, and promoting the export of American AI technology.”
However, this pro-growth, deregulation stance faces significant resistance from many corners of the public and political spectrum. A survey by the Artificial Intelligence Policy Institute found that approximately 80% of U.S. voters favor mandatory safety measures and government certification for advanced AI models. This preference aligns more closely with the Biden administration’s earlier, now-rescinded, cautious policy framework.
Meanwhile, big tech companies are lobbying vigorously against state-level AI regulations, particularly in New York. President Donald Trump’s administration, which unveiled its own AI blueprint on July 23, 2025, advocates for a unified national approach to avoid a confusing patchwork of state rules. Doug Kelly, CEO of the American Edge Project, emphasized, “To win this Super Bowl of A.I. against China, we need to be working from one playbook… we can’t win it if we have 50 different state-based playbooks... all of which create this pattern of confusion and chaos for our developers.”
Trump’s plan includes executive orders to expedite federal approval for data centers and energy infrastructure, highlighting the critical need for sufficient electricity to power AI advancements. Kelly remarked, “If we don’t have enough power, we can’t win this race.” Despite these federal efforts, Congress recently rejected a 10-year moratorium that would have barred states from regulating AI, though the debate over such a ban is far from over.
At the state level, New York lawmakers have passed several AI-related bills, including the Responsible AI Safety and Education (RAISE) Act, which requires large AI companies to publish safety protocols and disclose dangerous AI model behavior. Assemblyman Alex Bores, sponsor of the bill, insists that these regulations will not hamper innovation, stating, “To ask these companies spending hundreds of millions of dollars to have one person thinking about safety is not going to slow innovation down.” Bores also expressed optimism about the White House plan’s focus on transparency and biosecurity, but argued that “there is still a dearth of AI leadership at the federal level” and urged Governor Kathy Hochul to make New York a leader in AI standards.
Yet, tech companies continue to oppose state regulations like the RAISE Act, fearing that a fragmented regulatory environment will stifle innovation and complicate compliance. Justin Wilcox, executive director of Upstate United, warned that multiple state policies could hamper both large and small tech firms, pointing to a Brookings report that highlights upstate New York cities as prime locations for AI development. Wilcox advocates for a collaborative working group of public and private sector experts to guide policy decisions, emphasizing the economic potential of AI-related jobs in the region.
Beyond New York, a broader national debate is underway about the balance between innovation and safety. An opinion piece by James P. Steyer, founder and CEO of Common Sense Media, highlights the dangers AI poses to children, including increased exposure to misinformation and harmful AI-generated content. Steyer’s organization’s research revealed that three-quarters of teens have used AI companions, which can produce inappropriate and even dangerous responses. He argues that states have stepped up with “common-sense guardrails rooted in federalism,” citing laws in California, Kentucky, Maryland, and Tennessee that address AI safety, bias, and misuse.
Steyer warns against a federal moratorium on state AI safety laws, which he calls “a dream come true for AI companies” but “a nightmare for families.” He stresses that states have historically served as “laboratories of democracy,” pioneering protections that later became federal standards, such as smoking restrictions and seatbelt laws. According to Steyer, AI safety laws are essential to making the technology safer and more sustainable without sacrificing innovation.
On the other hand, some progressive states like California, Colorado, Illinois, and New York are pushing ambitious AI regulations, which critics argue could create a costly “regulatory thicket” that fragments the national market. A 2024 survey found 57 different definitions of “artificial intelligence” or “automated decision system” across state proposals, underscoring the complexity of harmonizing regulations. Colorado Governor Jared Polis acknowledged that his state’s AI law creates a “complex compliance regime” and called for a cohesive federal approach, even endorsing a federal AI moratorium.
The Trump administration and its supporters argue that excessive state regulations risk killing a transformative industry just as it is taking off. Vice President J. D. Vance remarked at the Paris AI Action Summit, “We believe that excessive regulation of the AI sector could kill a transformative industry just as it’s taking off, and we’ll make every effort to encourage pro-growth AI policies.” The administration stresses freedom for the private sector as the key to out-innovating global competitors, particularly China.
Congress faces a critical crossroads. While the Senate overwhelmingly defeated a proposed 10-year moratorium on state AI safety laws, efforts to revive such restrictions continue behind the scenes. Industry lobbyists and some lawmakers are exploring ways to block or limit state regulations through new legislation or amendments to must-pass bills.
Ultimately, the future of AI in America hinges on balancing innovation with safety and accountability. The federal government’s AI Action Plan aims to streamline infrastructure and bolster U.S. leadership, but public opinion and state initiatives reflect a strong desire for protective measures. As the nation grapples with this complex challenge, the question remains: can Washington and the states forge a unified path that fosters innovation while safeguarding citizens, especially the most vulnerable?
