Critics Say Cruz Proposal Takes Industry-Friendly AI Rules 'From Ludicrous to Insane'

Consumer advocates are criticizing a change made by U.S. Sen. Ted Cruz in the Republican megabill this week that would stop states from regulating artificial intelligence in order to bring it in line with the reconciliation process.

The House's version of the $4 trillion budget package, passed last month, contained a sneaky provision that would bar states from enforcing any proposed or existing regulations on AI programs for the next 10 years, which a critic called "one of the most radical positions Republicans have taken."

However, that version of the provision was rejected by the Senate parliamentarian, who oversees chamber rules requiring that reconciliation measures have a budgetary impact.

Cruz (R-Texas), the chair of the Senate Commerce Committee, proposed a workaround: threatening to withhold federal broadband infrastructure funding to coerce states into abandoning AI regulations.

The Senate bill's revised language would impact states' access to funding from the Broadband Equity, Access, and Deployment (BEAD) program. Part of former President Joe Biden's 2021 infrastructure law, BEAD allocated $42.45 billion to expand high-speed, affordable internet access across the United States. On Sunday, the parliamentarian approved Cruz's updated version of the bill.

"This backdoor preemption not only forces states into an impossible choice between protecting their residents and providing broadband access, but also undermines public safety, privacy, and democratic governance just as AI harms are accelerating," the consumer advocacy group Public Citizen said in a Tuesday statement.

States around the country have introduced dozens of bills aimed at curbing the potential harms of AI programs.

Many states have passed or introduced bills banning the use of AI to generate fake "revenge porn" or election misinformation. Some have enacted laws regulating AI in hiring and healthcare to prevent discrimination. Others have taken steps to ensure AI algorithms do not violate copyright protections.

Last week, Sens. Maria Cantwell (D-Wash.) and Marsha Blackburn (R-Tenn.) held a press conference in which they spoke out against the provision.

"They have adopted these laws that fill a gap while we are waiting for federal action," Cantwell said. "Now Congress is threatening these laws, which will leave hundreds of millions of Americans vulnerable to AI harm by abolishing those state law protections."

If the Republican moratorium passes, states will be forced either to dump these regulations and or hamstring efforts to update their broadband internet infrastructure.

"High‑speed internet is now a prerequisite for economic participation, education, and healthcare," said Tyler Cooper, editor-in-chief for the research group Broadband Now.

A nationwide audit published by the group earlier this month found that 26 million people across the United States lack access to high-speed internet. Cutting broadband funding to states could hinder efforts to connect them.

The parliamentarian's decision to greenlight this new version of the bill has drawn sharp criticism from consumer advocates.

"This extreme measure is a clear gift to Big Tech at the expense of everyday people,” said Ben Winters, director of AI and data privacy for the Consumer Federation of America.

The push to deregulate AI has big money behind it. Last week, the Financial Times reported that "lobbyists acting on behalf of Amazon, Google, Microsoft, and Meta are urging the Senate to enact" the moratorium.

According to data from OpenSecrets, these four companies alone spent nearly $19 million on lobbying in just the first three months of 2025.

That avalanche of money has left many doubting that Congress will ever regulate AI. But it also may ensure that states can't either.

"The tipping point from ludicrous to insane is making broadband funding for rural and urban communities contingent on states abandoning their right to protect their citizens—fully knowing Congress has not historically and will likely continue not to regulate Big Tech," said J.B. Branch, Big Tech accountability advocate for Public Citizen.