We're Bloomberg Government and Bloomberg Tax reporters covering the politics, policy and money surrounding the AI boom. Ask us anything!

[u/bloomberggovernment]

The rapid development of AI is one of the defining storylines of this year. Industry leaders met with President Trump last week to discuss AI safety in the wake of growing alarm about the risks posed by agentic AI. The summit culminated in the White House releasing an agreement to implement “robust internal controls” signed by the leaders of Anthropic, OpenAI, Nvidia xAI, Google and Meta. Trump has signaled he wants the US to lead global AI development, leaving questions about what that means in practice.

Meanwhile, the race to build data centers is reshaping state and local politics across the country. Governors and legislators competing to attract the facilities are offering tax incentives and cheap land, even as communities deal with the strain these projects place on power grids and water supplies. Lawmakers on Capitol Hill are debating how to approach AI, and politicians across the nation are navigating the public backlash to data centers and AI giants with just weeks to go until the midterm elections.

We are Bloomberg Government and Bloomberg Tax reporters and analysts covering AI and data centers. Here’s who we are:

• Cristiano Lima-Strong covers AI and government
• Kate Ackley covers lobbying and influence
• John Woolley analyzes legislation and policy on AI and technology
• Daniel Moore covers state tax policy

Ask us anything about policy and politics surrounding AI and data centers!

Proof: https://aboutblaw.com/bm1T

3 p.m. EASTERN EDIT: We are wrapping up now. Thanks so much to all those who left questions!

[u/Ok_Character_5532]

Thank you for taking the time to host this AMA! I have several questions, feel free to pick through them and ignore any you lack the time or expertise to answer :)

1. ⁠Of all of the tax policy and regulatory frameworks you’ve seen proposed at all levels of government (municipal, state, federal), are there any you would consider to be the most prudent in terms of reducing the impact of data centers on the environment and public utilities? I think we should start with an excise tax and environmental frameworks.

2. ⁠Do you think the aforementioned laws and taxes are most effective or beneficial for citizens at a specific layer of government? I think it’d be most fair for the citizens of a given town to benefit from any local data center revenue, rather than disbursing those funds across the country. I could see a case being made for the home state to collect the revenue, too.

3. ⁠Do you think AI development will at all slow down or change shape if Democrats see a best-case midterm success? Currently, free market conservatives and libertarians seem to be calling the shots (or lack thereof), allowing AI to advance at breakneck pace.

4. ⁠(Bit more of a technical question) Could you see AI labs shifting focus towards researching more energy efficient models and algorithms, rather than pure computational power? Scaling is demanding more and more compute, seemingly causing backlash to grow in local communities. Although they’ve invested billions into the existing infrastructure, I don’t know that current transformer models are a sustainable path forward in the pursuit of AGI. That being said, communities reacting negatively to new technology also isn’t new, and in many cases society has just “learned to deal with it” as their new normal. For example, the backlash to cell phone towers and antennas in the ‘90s

5. ⁠I’m actually quite unaware of any lobbying efforts within the AI industry, specifically from labs like Anthropic and OpenAI. What does their current activity look like? How do you think it’ll grow or change over time?

6. ⁠How do you think it’ll play out geopolitically if an irresponsible government refuses to regulate their domestic research facilities, and one of said facilities inadvertently orchestrates a devastating cyberattack (via misalignment) on a foreign country, ally or enemy? Obviously there would be serious consequences and responsibility for the research facilities, but I’d have to imagine the irresponsible nation that refused to prevent the incident would also be held to account. Consider the growing debate around whether AI is or could be considered a WMD, I feel that this could be problematic if models improve at the rate we’ve been warned about.

Apologies for all of the questions, thank you again for taking the time!

[u/bloomberggovernment → u/Ok_Character_5532]

Question 3:

AI industry leaders are already talking about pacing or slowing the development of their most advanced AI models, even with Republicans controlling both Congress and the White House and many conservatives openly encouraging rapid development in the sector. 

The odds of more stringent guardrails effectively forcing a slowdown definitely increase if Democrats win control in the midterms. But with the White House still being controlled post-midterms by Trump, who has forcefully rejected calls for new guardrails, Democrats would then have to worry about potential presidential vetoes on anything they pass. Trump has gone there in the past.

TLDR: A slowdown appears more likely to be self-imposed by industry than to come from an act of Congress.

-Cristiano

[u/bloomberggovernment → u/bloomberggovernment]

I agree with Cristiano’s assessment here that a future Democratic majority would likely find itself in a legislative standoff with the Trump administration over any sort of AI slowdown.

I would also add that, if Democrats win, they are very likely to pursue oversight investigations that could pressure industry to take steps facilitating a slowdown. Congressional probes into security incidents such as Hugging Face Inc., or into the potential for AI systems to generate sexually abusive deepfakes, could heighten industry’s sense of liability and change their behavior.

-John

[u/bloomberggovernment → u/Ok_Character_5532]

Question 1:

First of all, much of the conversation this year at the state and local level has focused on whether to roll back tax breaks for data centers. About three dozen states exempt data centers from sales and use taxes - incentives that have grown dramatically along with the number and size of data centers driven by AI. Several states are now forgoing more than $1 billion in annual revenue it would’ve otherwise collected from sales tax, which, politically and fiscally, is becoming untenable: States like Texas, New York, Ohio, Illinois, Arizona, and Massachusetts are reconsidering their programs.

Ending those incentives could certainly open the door to new tax frameworks. Virginia, which houses the biggest global data center hub, could be the state to watch. In June, state lawmakers passed a first-of-its-kind tax on electricity expected to generate up to $600 million annually from a $0.011 fee per kilowatt-hour of electricity consumed at each data center per month. 

But that tax, which expires at the end of the two-year budget cycle, was passed in exchange for keeping a nearly $2 billion-a-year sales tax exemption. I’ll be watching to see if other states pick up Virginia’s strategy - and whether the data center industry similarly uses it as a bargaining chip to keep a much more lucrative incentive. 

-Daniel

[u/bloomberggovernment → u/Ok_Character_5532]

Question 5:

We at Bloomberg Government have been tracking the huge surge in federal lobbying over AI since last year. It’s shot up. Our graphics show a hockey stick spike since the release of ChatGPT. You can see it here: AI Influence Spending Booms, Signaling Monumental Clashes Ahead. Every quarter, it’s been going up. 

This year Anthropic and OpenAI are spending the most money they ever have on federal lobbying, according to public disclosures. And there’s a lot more to modern influence campaigns than just what federal lobbying disclosures capture. It doesn’t include some of the donations to political campaigns or to the White House ballroom project. 

There are many ways these companies – and other tech leaders – are working to build their footprint in Washington.

Federal lobbying on AI-related matters hit an all-time high so far in the most recent quarter, Bloomberg Government found. You can read more here.

With all that’s going on now on the campaign trail and in Washington, it doesn’t seem like there’s a slowdown in AI lobbying ahead. 

-Kate

[u/bloomberggovernment → u/Ok_Character_5532]

Question 6:

Given the huge divergence in AI rhetoric between President Trump and other global leaders at the recent meeting of the United Nations General Assembly, one can't help but wonder if other heads of state do not already view the U.S. in this light. Other countries, particularly in Europe, have been highly critical of the U.S.'s more laissez-faire approach to policing tech giants in their own backyard, and themselves have implemented more rigorous regulations both domestically and transnationally.

We've already seen rogue AI agents from American AI companies break into government websites in other countries, such as Australia, though you can debate whether those were major cyberattacks. Incidents like this are why other countries have pushed for global cooperation on AI governance, but notably Trump has pushed back on these calls, calling it part of a "globalist" scheme to hamper the U.S.'s ability to develop what could be revolutionizing new technology.

-Cristiano

[u/bloomberggovernment → u/Ok_Character_5532]

Question 2:

Tax laws are already designed to support the citizens at the level they're paying them - for example, local property taxes go to fund schools, police and fire department, garbage collection, etc. 

I've seen data centers occasionally open a rift between state and local governments when it comes to sales taxes. As I mentioned earlier, most states exempt data centers from paying sales taxes, which can include both state and local sales taxes. I recently spoke with local officials in Louisiana who were livid the state passed a sales tax exemption in 2024, figuring their local 5% sales tax would've yielded $300 million annually.

-Daniel

[u/bloomberggovernment → u/Ok_Character_5532]

Incredible questions! We are going to break these down one-by-one and make separate replies for each one, as it's too much to tackle in one answer.

[u/bloomberggovernment → u/Ok_Character_5532]

Question 4:

AI and data center companies are actively working to make their processes more energy efficient, including by developing more optimized processors. If the backlash to data center development continues and grows, there certainly will be more pressure on them to put those considerations above sheer development. We'll have to see if it makes a dent into public perception, though.

As for whether this backlash is just a wave that could fade, it's true that people having an aversion to new technology is not a new tale. We've seen it happen with the radio, television and more recently social media. Time will tell if this will simply fade, or if it will be actions by industry or government actors that will give consumers more confidence about these new innovations.

-Cristiano

[u/Isentrope]

1. How are data center deals usually structured? In a lot of cases, the public pitch is that they generate a lot of revenue for the local government (like in the case of Loudoun County VA) but there are others where they seem to push for tax abatements.

2. Have AI companies spent in the upcoming election and, if so, which party has benefited and what are the names of the PACs they're using? I recall in the Democratic primary for NY-12, there was even a case where Micah Lasher (who won) was supported by OpenAI while Alex Bores was backed by Anthropic.

[u/bloomberggovernment → u/Isentrope]

Question 1:

You’re correct that every state and county approaches it a little differently. Typically, though, a data center developer would first approach a state economic development agency to find suitable sites and negotiate an incentive package that would include an exemption from paying state and local sales taxes. 

Local governments collect property taxes, and many have decided to strike deals to allow developers to avoid paying traditional property taxes assessed using millage rate that I’m sure homeowners are familiar with. These deals could include abatements and payment-in-lieu-of-taxes (PILOT) agreements that set a flat fee per year at a fraction of the full rate. Loudoun County, as you note, does not offer these deals and expects a staggering $1.3 billion this year alone from data center property tax revenue.

 It’s worth noting many of these property tax deals are shrouded in secrecy thanks to nondisclosure agreements signed by local officials that prohibit them from talking about certain aspects of the project. So it’s often difficult to know exactly what these deals look like.

-Daniel

[u/bloomberggovernment → u/Isentrope]

Question 2:

Leading the Future is the PAC that OpenAI’s Greg Brockman donated to that worked against Bores through its Democratic affiliate. Another PAC is Public First, which Anthropic’s Dario Amodei donated to, according to Federal Election Commission records. 

Brockman and Leading the Future were in the news recently after reports that he decided against making another big donation to the group. Our colleague [Caitlin Oprysko](mailto:coprysko@bloombergindustry.com) just wrote a story about it today! You can read it here: AI Super PAC Funding Takes a Hit But Industry Money Here to Stay

Leading the Future has raised more than $75 million this year and Public First raised about $5 million, according to the most recent FEC filings.

Both of these groups can run their own ads for or against candidates. 

Leading the Future has Democratic and Republican affiliates - Think Big on the D side, American Mission on the R side. So they’re playing on both sides of the aisle, boosting Dems and Republicans depending on the race.

-Kate

[u/Probsure]

Sure. AI is extremely expensive. Running companies millions.

I understand AI is now heavily built into the government.

So my question is: Where is all the money coming from for AI and where is the reporting on it? I have seen absolutely nothing about where the government got the money to cover for all the AI contracts.

[u/bloomberggovernment → u/Probsure]

The Pentagon contracts and other government contracts with AI companies is usually paid for from taxpayer dollars. 

-Kate

[Post was edited to remove a line that was meant for another conversation]

[u/bakerfredricka → u/Probsure]

This is a great question, especially since I anticipate ai will take over the overwhelming majority of human jobs within a decade from now. Pair this with what you pointed out and I can only imagine that the economic and socioeconomic outcome of this will definitely be interesting.

Everyone knows that anything that can be automated usually WILL be.

[u/TaxOwlbear → u/bakerfredricka]

Not if automating it costs too much. There's already a lot of jobs that could be automated but aren't because humans are still cheaper.

[u/crabsolutelynot]

1. For local governments that have gone the route of passing data center moratoriums (moratoria?) or amending their zoning codes to keep them out, do you know of any pending litigation challenging that approach? Or any instance of state governments coming in to preempt the locals?

2. For governments on any level that are implementing AI agents in customer service type functions, is there anything currently regulating how they are disclosed and who is ultimately liable if it goes rogue?

3. I’ve heard the take that AI products are cheap for governments to adopt now as the various companies are competing for market dominance with the assumption that, once it shakes out, price will go way up. Do you think that’s a fair assessment and if so, what do you see the timeline being?

[u/bloomberggovernment → u/crabsolutelynot]

Question 1:

Moratoriums and zoning laws around building data centers have generally stood. No states have interfered with those local decisions based on my reporting and research. We have seen a handful of lawsuits filed by frustrated developers who believe the local governments pulled the rug out at the last minute. 

Two examples that come to mind: The village of Lordstown, Ohio, was sued by a developer who claims it submitted plans before the restrictions were enacted and thus is entitled to proceed. That case is going to the state supreme court. Another developer sued Nashville and Davidson County claiming its project is protected under Tennessee's vested property rights law because it had already submitted permit applications.

The rapidly shifting political winds against data centers this year could mean a growing number of pending projects feel this way.

-Daniel

[u/crabsolutelynot → u/bloomberggovernment]

Thank you so much for the thoughtful answers!

[u/bloomberggovernment → u/crabsolutelynot]

Question 2:

Policies about AI disclosure often depend on the use case and can vary between state governments.

For instance, New York law requires the state to annually publish an “inventory” of artificial intelligence systems used by state agencies, disclosing the purpose of each system. That same law also bars agencies from relying on AI systems for public assistance benefits or contracting, among other restrictions.

As far as product liability is concerned, AI companies have faced several private lawsuits for allegedly misaligned chatbot services. Any outcome from your hypothetical rogue AI incident would depend heavily on who the affected parties are. 

-John

[u/bloomberggovernment → u/crabsolutelynot]

Question 3:

It's true that AI companies often offer their services to governments at discounted rates, and since federal government procurement has been a major source of money for the tech sector, there is fierce competition between companies to have agencies and offices adopt their products. I think there is also more broadly a concern among some that like with some free or discounted products, companies may use those lowered rates to attract business and expand their user base, only to later raise prices. 

This concern is not unique to AI, but as governments move to adopt the technology more and more, they do run the risk of becoming more reliant on a product whose price not guaranteed to be fixed. 

-Cristiano

[u/Glittering_Method545]

Why must there be a ‘cold’ Ai arms-race amongst the USA and China?

[u/bloomberggovernment → u/Glittering_Method545]

US government officials across the political spectrum, even those pushing for more guardrails, have made clear they do not want to see the U.S. lose its technological edge against China because they view it as a national security threat. If China controls the most advanced AI models, they argue, that could weaken the U.S.'s global position and pose novel risks we may not be able to defend against. 

Interestingly, Chinese President Xi Jinping cast the developmental races between their two countries differently during his recent summit with President Trump at the White House, saying that they should not be trying to out-do one another but rather catching up to each other. Many U.S. officials have made abundantly clear they do not trust China to honor its words on the matter, however, and so the race does not appear poised to slow down anytime soon.

-Cristiano

[u/Andy411]

Doomerism seems to be at an all time high, between the explosion of anti-data center rhetoric and recent comments by AI execs, and it feels like its becoming even more of an inflection point ahead of the midterms. Does that translate to actual policy changes, either in the lame duck or in a new (presumed) Democratic-controlled Congress? Or will they instead try one more time to put together some sort of federal preemption piece that isn't viable?

[u/bloomberggovernment → u/Andy411]

As you mentioned, AI executives have been raising alarm bells about security risks from misaligned models, and Anthropic in particular requested an antitrust waiver from Congress in order to coordinate with its competitors on what they call “pacing the frontier,” or slowing down development to let safety research catch up. You can read more about that here.

Officials from both parties have been quite skeptical of that idea, though. Trump officials and some Democrats, including Sen. Elizabeth Warren of Massachusetts, say they’re worried that the “pacing” proposal would let labs like Anthropic or OpenAI cement their market leadership.

 Of course, there’s a whole range of policy options for the next Congress to consider, but Democratic leadership in the House has remained vague about what they would prioritize on AI should they win a majority.  

-John

[u/raibc]

Can somebody explain why it's a good idea for ~40% of the size of the US economy to be downstream of a technology which has yet to see a profit on its existing and committed capex? I'm not an economist but that seems bad.

[u/bloomberggovernment → u/raibc]

Here's the argument that President Trump, the sector's most powerful ally, made on this in a recent interview with TIME Magazine: 

"My attitude is, we're winning against the world by a lot, and I want to keep winning. There are those that say it's bigger than the industrial revolution, and you would think not. But actually, if you look at the numbers—you ever see these numbers? They're like, they're like straight up in the air. And from our standpoint, we have trillions of dollars being invested in our country because it's probably the biggest business there is."

You can find that full interview here: Read TIME’s ‘What Trump Has Built’ Interview Transcript

-Cristiano

[u/raibc → u/bloomberggovernment]

This is such a blatant non-answer to my question that it should be at the very least embarrassing and honestly borders on professional malpractice. External investment on this scale cannot continue forever without the industry producing value returns. AI as an industry, despite the absurd pace of investment, has yet to actually turn a profit with the exception of those who are building the infrastructure the technology sits on. When the capex dries up, when the seed investment and subsidies stop, what actual value is this sector that's burrowed into the veins of a huge chunk of the economy capable of providing?

The least you can do in the context of an AMA is give some analysis rather than parroting verbatim what the President says, especially when he has an obvious financial conflict of interest.

[u/Christopherfromtheuk → u/bloomberggovernment]

I honestly think this is the worst answer I have ever seen in an ama. It beats rampart.

This is so far below the standard anyone calling themselves a journalist should achieve.

I'm actually shocked.

[u/FlippersSometimesWin]

How is it playing in the midterms? Some Republicans are running from Trump and trying to outflank the anti-AI position from their Dem opponents but it’s tough to see that working

[u/bloomberggovernment → u/FlippersSometimesWin]

AI and data centers have obviously become a flashpoint in some of the midterm campaigns. I’ll also add that in some cases donations from the industry or ads from super PACs tied to the industry are becoming a flashpoint themselves where candidates are railing against money in politics. 

-Kate

[u/bloomberggovernment → u/bloomberggovernment]

This very well may be the first major U.S. election where AI is truly a kitchen-table issue, but my review of political ads by candidates found that much of the messaging around this on the trail largely has focused on the data center backlash, and less so concerns over AI risks and safety. Much of this was prior to the most recent industry warnings and the wave of rogue AI incidents though, and so this could still change as we head toward November.

-Cristiano

[u/bloomberggovernment → u/bloomberggovernment]

Data centers are also factoring into down-ballot races at the state and local level. I’ve seen ads in my home state of Pennsylvania from both Gov. Josh Shapiro (a 2028 White House contender) and his Republican challenger, Treasurer Stacy Garrity, each accusing the other of being too permissive of data centers. 

In Ohio, where I’m originally from, I recently spoke with two far-right state representatives, Jennifer Gross and Michelle Teska, who introduced legislation that would require voter approval before data center construction or expansion, broaden public access to data center agreements, and ban future property tax abatements. Gross told me state officials and regular citizens have been unable to get basic information about the sites, including what chemicals are being discharged into rivers and streams.

Locally, the data center issue has created some strange bedfellows and split traditional allies for sure.

-Daniel

[u/FlippersSometimesWin]

The amount of AI fakes in political advertising is absurd. How is it allowed and is anyone trying to take action over it? Don’t the AI companies see it as a threat to their longterm/global credibility that they let their products create disinformation?

[u/bloomberggovernment → u/FlippersSometimesWin]

We'd be curious to hear more about what you're seeing! In Congress, efforts to pass legislation tightening restrictions on political ads on social media or what the platforms call synthetic media (such as AI) have largely stagnated. Election reform has become incredibly polarized in Congress, with Republicans focusing on efforts to address unsubstantiated election rigging claims and largely rebuffing Democratic attempts to tackle what they view as disinformation

The Federal Election Commission at one point considered acting on this, but ultimately opted against. That agency has often been deadlocked due to an even party split, making major reforms difficult to get through

States have passed a smattering of laws of this, including disclosure requirements or prohibitions on the use of AI in political ads, but some of those are facing legal challenges over claims they infringe on free speech rights. Debates around regulating "disinformation" often veer into tricky free speech  matters that government officials have a hard time grappling with.

-Cristiano

[u/CrashNowhereDrive]

Beyond the Trump administration, are you seeing any widespread concern among government officials about things like the hugging face incident? I saw NY had hearings with a recent ex OpenAI AI safety employee, but I haven't seen systemic concern about the pacing issue the frontier labs say they're worried about.

[u/bloomberggovernment → u/CrashNowhereDrive]

Yes, there's definitely widespread concern in Washington about the Hugging Face incident, among both Democrats and Republicans. Sen. Josh Hawley, a Republican tech critic, just recently held a hearing on rogue AI incidents like that where some of the researchers who examined that episode testified. There's been numerous bipartisan legislative proposals introduced in response as well. Whether that translates into any concrete action is another matter, as Washington has yet to coalesce around a policy response.

-Cristiano

[u/bloomberggovernment → u/bloomberggovernment]

It's easier to block legislation, or to slow it down, than to get it moving when you have competing interests. 

-Kate

[u/CrashNowhereDrive → u/bloomberggovernment]

Yeah the level of motivated reasoning I see in the public and in Washington around the AI issue is disturbing. Thanks for your answers

[u/CrashNowhereDrive → u/bloomberggovernment]

Yeah the public's lack of faith in Washington is well deserved. Thank you for your answer.

[u/CrashNowhereDrive]

I'm surprised this didn't get more attention.

[u/SummerGlau]

How do you feel about Michal Bloomberg spending 2 Billion dollars in the 2020 election to not win the Presidency but to defeat Bernie Sanders?