Trump’s AI Order Raises New Oversight Questions

0:00Welcome to the podcast. I'm your host, Jaden Schaefer. Today on the show, we're talking about one of the most important AI policy moves that I think we've seen in quite a long time. President Trump has just signed a new AI executive order. I want to talk about why this could be fundamental in shaping the future of AI inside of the United States and perhaps inside the world. This isn't just another bureaucratic document that is going to sit on a shelf. This executive order is a really direct shot at the patchwork that we have right now on a state level of different AI regulations. We have California, we have New York, we have Illinois, a whole bunch of people have been states have been putting in their own AI regulation.

0:37And what people are saying is that this is a signal to Silicon Valley and a statement that America is trying to essentially consolidate the power of this regulation on a federal level and on a statewide level. This is what Trump's goal is. So we're going to dive into all of this before we get into the story. You probably pay for a bunch of different subscriptions to get access to the best AI tools. I know it can add up fast when you have ChatGPT and Claude and Google Gemini and Grok and all of that. I had the same problem, so I built AIbox.ai, and for just$20 a month, you get over 40 of the top AI models in one simple platform.

1:12You get image, audio, text, everything you need. It's all in one place, so you don't have to juggle tabs. You don't have to waste money on overlapping subscriptions. If you want to give it a try, there's a link in the description to AIbox.ai, my own startup. I'd love for you to check it out. All right, let's get into it. So President Trump recently signed a new executive order on AI. And I think just at a high level, it's about one thing. He's trying to centralize the AI policy at a federal level. He's trying to stop individual states from, you know, what he says is strangling innovation with 1000 different rules.

1:45I know that it is really tricky to have this state by state regulation on a lot of technological areas. AI feels like a new thing. And so the argument is that, you know, it's better on a federal level. I think this move by the administration was inevitable. What we're seeing in the U.S. is pretty tricky. California has their own set of AI rules. Colorado has another. New York has its own algorithm laws. Illinois, Virginia, and a bunch of others are all kind of piling on. And so the problem isn't that people, you know, want AI to, isn't that they don't want AI to be used responsibly. Obviously, everybody wants that.

2:19I think the big problem is, you know, deciding which state makes up the definition and the compliance rules. The hard thing is, it's basically like the state with the big population that makes the strictest rules is going to be de facto what everyone has to follow. So if that became California, if California has a massive population, and a lot of these AI companies reside inside of there, but it could have been New York as well. But let's say California makes all of the AI, you know, all of the AI regulations and rules, and they're the strictest, then basically, if you want to create AI in the United States, you need that market.

2:51And so you have to follow those. I think that's what the federal government is trying to wrestle control away from them. Because there's, you know, you have to think there's a lot more than just the compliance, there's the reporting, there's penalties. And so it's really tricky for smaller AI companies, obviously to grow. And that's kind of the argument, whether that's an act, you know, an accurate kind of issue. But the argument is that this is making it tricky for smaller companies. I think that there's probably an element to this of like, California making rules and California extracting penalties and fees from big companies.

3:21So you could see that that would be an incentive for California to make the strictest rules. And of course, that is why you can imagine Trump with his kind of beef with California and Newsom really doesn't want him to have that power. So I think if you're in a startup, it is really difficult to get 50 different legal teams going or someone that can represent all 50 different states. If you're an enterprise company, this is definitely going to slow down development. If you're a foreign company, especially China, This is probably something that they don't care at all about because their regulation is basically non-existent.

3:54I guess they do have rules about what data can go into their models, but beyond that, they can release whatever they want. They don't have to red team or do any safety testing. So this is kind of a tricky point where we're making it harder for American companies than foreign companies. And so Trump's executive order is saying that this shouldn't be the case. I think the core idea is that the United States is going to have one national AI framework, not a fragmented state by state regulatory kind of thing that we have going on right now. And I think the current order directs the federal agencies to identify state AI laws that are considered overly burdensome, inconsistent or harmful to national AI competitiveness.

4:32And then it is letting those federal government agencies go and challenge those regulations in law. So essentially, it's just trying to counter sue and get rid of any regulations that they don't think are, you know, are good. So states can still go and make all their own AI regulations. But if they make one that is deemed overburdensome by the federal government, they'll get sued. They'll have to have a lawsuit about that. I think one of the most controversial parts of this is that it ties federal funding to compliance. So in other words, if a state is insisting on enforcing a particular AI regulation and it's directly conflicting with the federal AI policy, that state could lose access to certain federal funds.

5:09That's infrastructure money, broadband funding, technology grants. All of those are on the table with this executive order. And I think predictably, a lot of governors of different states are mad about this. from a business and innovation standpoint some people are saying this makes a lot of sense ai is not you know like zoning laws or local traffic rules it's kind of foundational technology it touches national security defense health care finance education productivity so it's really tricky to have 50 different interpretations of what is quote unquote allowed if you have every single state making their own rules so i think this is similar to how we handle aviation or like telecom um you know interstate commerce all that kind of stuff if every state had their own rules for airplanes, it would obviously be chaos and a massive nightmare for every airport and Boeing and Airbus and, you know, like everyone.

5:58So we have a federal level, you know, we have this on a federal level for like the aviation industry. So this executive order is trying to create something called the AI litigation task force inside the Department of Justice. And their job is essentially to actively go and challenge state laws that are, you know, what they're doing, what they call obstructing national AI policy. So I don't think this is a symbolic move, which I feel like sometimes in these in these like, executive orders, we see like it's kind of posturing and feel symbolic. And it's hard to see what the tangible impact will be.

6:30I think they're they're pretty serious. I mean, they're essentially saying like, you can keep doing whatever you guys want. But like, we will sue you, you're going to go to court if it's if it's not what the federal regulations are, if it's more overly burdensome than that. So I think that's why it matters. There's a lot of critics right now that are jumping in and saying that undermines states rights. And I think I'm generally very pro states rights. But I think that there is a bit of a difference between local governance and national competitiveness. When state level regulation is threatening America's ability to lead in a strategic technology, then the federal government, I think has a responsibility to step in.

7:05In my opinion, this is a I would prefer someone that has an AI company, I'd prefer to just have one set of guidelines and rules that I have to follow instead of having to, you know, work on 50. So I think if, you know, all of these different states, AI laws are coming from deep technical understanding, that's fantastic, but not all of them are. And I think they're often written by people who don't just build software. They don't train models. They don't deploy AI systems. They're written maybe with good intentions, sure, in many cases, but that's not how you win a, you know, technological race with Russia and China is through good intentions.

7:40So I think another important part of the executive order is its framing as, you know, essentially framing AI as a really important economic growth engine for America. I think this is very different from previous administration's approaches in technology. You know, we've leaned heavily into kind of the safety mandates during the last administration, audits, compliance, all of that. I think right now they're framing this as, you know, they're trying to remove barriers and accelerate development and let American companies compete and win. So I don't think that means no guardrails. I just think it means that there are proportionate guardrails.

8:16I think that it means that we're going to trust the innovation, we're going to punish actual harm. And instead of having kind of like a preemptive regulatory hypothetical risks that we're trying to stop, if there's an issue, we'll stop it. But otherwise, we'll try to see where AI takes us and we'll let it get developed. So I think one thing that's important to understand with this is that the executive of order doesn't instantly erase states laws, right? Because we have all these different states, California, New York that have already been enacting laws. And so all this is doing is kind of setting it up where legal challenges from a federal level can be taken to make sure that everything is kind of in line.

8:53The Commerce Department has been asked to review state AI laws and publish guidance on which ones are considered problematic. This is going to take months, so it's not going to be quick, you know, or I guess immediate months, I guess, for the federal government is pretty quick. After that, we're going to see a bunch of lawsuits. Some states are going to fight. Others, I think, will just kind of accept what is. This is definitely going to be a multi-year battle. This is, you know, this is not over. It's kind of just the beginning. But I think the signal has been sent. And I think, you know, startups, investors, people that are building, they know that America is actively trying to make it easier to build AI inside of our country.

9:29I think we've already seen how this is kind of helping with the markets when I think when like a government makes it clear that they support innovation or capital flow, the talent will stay, companies will invest more. And I think that's kind of what we're seeing right now. So of course, the media's reaction has been, you know, framing this as Trump helping big tech. I personally, I think this is a shallow take. And I'm not like a huge fan of big tech owning everything in the whole world. I think there should be way more competition. But I do think that right now we have companies like opening eye and google who have massive budgets massive programs they could easily afford to kind of follow all the regulatory processes of all 50 states that's not a big deal and it feels like some of the regulation on that they lobby for um opening eye specifically is you know just them pulling the ladder up behind them so personally as someone that's working on ai company i think um making this simpler and easier for smaller companies is the best thing to do so So one thing that I also want to point out is how it fits into kind of the broader geopolitical picture.

10:31China has a centralized AI strategy. Europe has a really regulation-heavy AI policy that's already definitely slowing adoption. I don't think that's disputable. They have the same population basically in Europe as the United States, and the United States has, you know, 10x or maybe 100x AI companies coming out of it. So we'll definitely keep a close eye on this. Thank you so much for tuning into the podcast today. This is your number one spot for the latest in AI business news and everything that's happening in tech. If you enjoyed the episode, it would mean the world to me if you left a rating review on Apple Podcasts or Spotify.

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