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Pentagon’s 2026 strategy pivots to flexible realism and warrior spirit to counter China

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The US Department of Defense has released its 2026 National Defense Strategy (NDS), outlining a pivotal shift toward “flexible realism”—a doctrine that prioritizes the protection of American interests over global “nation-building” projects.

According to the NDS, this approach is anchored by a “Trump Addendum to the Monroe Doctrine,” which prioritizes the security of the US homeland and maintains dominance over the Western Hemisphere. This document follows and reinforces the broader US National Security Strategy (NSS).

The strategy identifies China as the “primary rival” and issues a blunt demand to allies and partners: they must significantly increase their financial contributions, targeting a new spending standard of 5% of their Gross Domestic Product (GDP).

Through a “national industrial mobilization” and the “revival of the warrior spirit,” the NDS aims to deter adversaries such as Russia, Iran, and North Korea. Ultimately, the strategy seeks to achieve global stability by rebalancing military responsibilities and focusing on pragmatic security rather than idealistic foreign interventions.

America First: Rejection of “utopian idealism”

The 2026 National Defense Strategy defines “flexible realism” as a clear-eyed, common-sense approach to national security that prioritizes American interests over abstract global ideals.

Flexible realism rejects the “grand strategies” of previous administrations that conflated American interests with those of the entire world or sought to “solve all the world’s problems.” Instead, it focuses on “real, credible threats to the safety, liberty, and prosperity of Americans,” acknowledging that threats to the US homeland are more visceral and significant than those in distant regions.

The NDS explicitly contrasts flexible realism with “castles in the clouds” abstractions like “utopian idealism” and the “rules-based international order.” It declares an end to goals such as regime change, “endless wars,” and “grand nation-building projects,” replacing them with a “hard-headed realism” designed to achieve a “noble and proud peace.”

According to the Pentagon, this approach requires a pragmatic correlation between resources and objectives. The NDS acknowledges that the US “cannot act everywhere alone” and cannot solve every global problem; it calls for the military to “evaluate, rank, and prioritize” threats based on their severity.

In practice, flexible realism aims for a “resilient and sustainable balance of power” rather than total global hegemony. Regarding China, for instance, the strategy seeks a “reasonable peace” and a balance of power that prevents Chinese dominance over the US, explicitly stating that this goal does not require “regime change or another existential struggle.”

The document contends that this approach “does not mean isolationism.” On the contrary, it envisions a “focused and truly strategic approach” where the US acts globally to advance its practical interests—particularly alongside allies—while insisting that those allies shoulder the primary burden of their own regional defense.

Burden sharing and defense spending

The NDS fundamentally redefines global burden-sharing, shifting alliances from a model subsidized by the US to one of “clear accountability” and self-sufficiency. It argues that allies must cease acting as “dependents” and instead function as true partners.

This “America First” approach asserts that by prioritizing US interests and demanding that allies take primary responsibility for their own security in most theaters, the US can concentrate its resources on defending the homeland and deterring China.

In this context, the strategy redefines requirements through specific financial targets, operational changes, and strategic ultimatums. These include a new global financial standard, “primary responsibility” for allies where the US acts as a supporter rather than a lead, and the prioritization of “model allies.”

For example, the US will now look to delegate the Ukraine issue to Europe, the tensions on the Korean Peninsula to South Korea, and the management of Iranian aggression in the Middle East to Israel and Gulf allies.

By compelling allies to act, the Pentagon aims to focus the US military on its two highest priorities: defending the US and deterring China in the Indo-Pacific.

The primary strategic rival: China

The NDS describes one of the “most dangerous” security environments in the nation’s history, where adversaries have grown increasingly powerful because the US failed to maintain its advantages.

Major geopolitical threats are categorized not only by state actors but also by their geographical proximity to the American homeland and the systemic risk of simultaneous conflicts.

The strategy identifies the People’s Republic of China (PRC) as the primary strategic rival. The NDS describes the PRC as “the most powerful state we have faced since the 19th century,” asserting it ranks second only to the US on a global scale.

The threat from China is defined by the “pace, scale, and quality” of its military forces, which include capabilities capable of striking targets far beyond the Western Pacific.

The Pentagon points out that the fundamental danger is not merely military, but China’s potential to dominate the Indo-Pacific region. There is significant concern that such dominance would effectively control American access to the “world’s economic center of gravity.”

Accordingly, the US goal is to maintain a balance of power to prevent China from dominating the US or its allies, seeking a “reasonable peace” rather than pursuing regime change.

The NDS approach to China is summarized as “deterring China in the Indo-Pacific through strength, not conflict.” Rather than seeking confrontation or isolation, the strategy envisions a dual approach: building robust military deterrence (“strength”) as a prerequisite for effective diplomatic and military engagement.

The document explicitly states that the US goal is not to “dominate China” or to “strangle or humiliate” it. Instead, the US will seek a “reasonable peace” characterized by a balance of power where no country can dominate another.

A message to Europe: Provide your own security

The 2026 National Defense Strategy fundamentally redefines Europe’s role from a region dependent on American security guarantees to one that assumes “primary responsibility” for its own conventional defense.

The strategy makes it clear that NATO allies must transition to taking the lead in defending the continent, while the United States provides “critical but more limited support.”

This shift is based on the assessment that Russia is a “persistent but manageable threat” and that the collective economic and military power of NATO members in Europe “dwarfs” that of Russia. The document notes that the German economy alone far outstrips Russia’s.

Consequently, the NDS argues that Russia is “not in a position to attempt European hegemony,” meaning Europe is capable of managing the threat without US dominance.

Europe serves as the testing ground for the White House’s new “global standard” for burden-sharing. The strategy references a “Hague Summit” where NATO allies are expected to set a total defense spending target of 5% of GDP. While the Pentagon emphasizes it will “provide incentives and opportunities” for allies to meet these targets, it insists these commitments must be fulfilled.

While stating that the war in Ukraine “must end,” the document places the responsibility for supporting Ukraine’s defense and maintaining the subsequent peace directly on European allies.

Declaring this to be “primarily Europe’s responsibility,” the document rejects the previous administration’s approach, which it claims allowed allies to engage in “free-riding.”

To help NATO allies generate the forces necessary for their own defense, the strategy envisions expanding transatlantic defense industrial cooperation and reducing trade barriers.

The “Model Ally”: A primary role for Israel in the region

Under the 2026 National Defense Strategy, Israel is identified as the “model ally” and serves as the primary example of the “America First” approach to burden-sharing.

The strategy redefines the US relationship with Israel based on the principle that allies must have the will and capability to defend themselves, with the US providing “critical but limited support.”

According to the Pentagon, Israel fits the definition of a “model ally” because, particularly following the October 7 attacks, it has proven it possesses the “capability and willingness to defend itself.”

Unlike allies criticized as “dependents,” the document praises Israel for taking action for its own survival. Consequently, the strategy states that the US should “empower” Israel rather than “tie its hands.”

Consistent with the strategy’s broader push for regional burden-sharing, Israel is expected to assume “primary responsibility for deterring and defending against Iran and its proxies.”

The document contends that Israel’s operations have “severely weakened” Iranian proxies, specifically Hezbollah and Hamas.

Israel’s role extends to stabilizing the regional security architecture. Building explicitly on the Abraham Accords, the Pentagon intends to “achieve integration between Israel and our Arab Gulf partners.” This effort aims to create a coalition where regional partners collectively exert more effort to defend themselves, allowing the US to focus its primary attention on the Indo-Pacific and its own borders.

While Israel leads the fight, the US commits to “strongly supporting Israel’s self-defense efforts.” This support is characterized as “critical but limited”: the US will provide the tools and support necessary for Israel to succeed (such as arms sales and intelligence sharing) but will not assume the primary combat role on the ground.

Instructions to the Gulf: “Integration with Israel”

According to the 2026 National Defense Strategy, a successful transformation of the region is defined by the establishment of a “more peaceful and prosperous Middle East” achieved through local ownership rather than American intervention.

The Pentagon argues that this transformation cannot be imposed from the outside. According to the US, it can only be realized by “those with the greatest stake in the region’s future”—the regional nations themselves.

Success is defined by regional allies and partners assuming “primary responsibility for deterring and defending against Iran and its proxies.” The US role shifts from leading the struggle to a supportive one.

According to the NDS, a successful transformation requires “deepening cooperation and integration” between Israel and Arab American partners, explicitly based on the framework of the Abraham Accords.

Defense industry linked to Trumpist economic policies

The NDS describes its industrial mobilization plan as a “national mobilization” and an “industrial call to arms,” likening it to the industrial revivals of the World Wars and the Cold War.

The plan aims to “strengthen the US Defense Industrial Base (DIB)” to support the President’s claim of a “once-in-a-century revival of American industry.”

This includes the re-establishment of a “world-class arsenal”; modernization and deregulation; the adoption of AI and innovation; internal reform of the Pentagon to increase production capacity; the expansion of the supplier base; and deepening integration with allies.

Preparing the military for war

The document defines the “warrior spirit” as the “heart of the US military”—a set of values exemplified by American heroes such as World War II veterans.

According to the document, the “warrior spirit” is inextricably linked to the military’s “fundamental, irreplaceable role.” Reviving this spirit is presented as necessary for the American military to refocus on “decisively winning the nation’s wars.”

This entails moving away from what the document describes as distractions, such as “social engineering” or “nation-building.”

The core premise of the strategy is the claim that previous administrations neglected and often “actively undermined” this spirit.

The document argues that true deterrence is a byproduct of a military focused on lethal force and victory, rather than abstract concepts like “grand nation-building projects” or the “rules-based international order.”

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The system that needed Lindsey Graham

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13/07/2026

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Thomas Karat, behavior analyst

The senator died Saturday night of an aortic dissection, at seventy-one, in the middle of a campaign for a fifth term. His communications director cited the medical examiner’s preliminary finding: a rupture in the body’s largest artery, the consequence of arteriosclerotic cardiovascular disease. The tributes arrived within hours. Trump called him a true American patriot. Volodymyr Zelensky, who had met him twice in the preceding week, called him a friend who was there when it was needed most. Mark Rutte and Benjamin Netanyahu sent their own. Roger Wicker, chairman of the Armed Services Committee, said there were no words to describe Graham’s impact on the foreign and domestic policy of the United States.

There are words. The obituaries have chosen the wrong ones, and in doing so they have skipped the only question worth asking about a man like this. Not whether he was sincere in his convictions — he was, exhaustingly so — but how a senator whose reflexive answer to every foreign crisis was force spent twenty-three years being handed the committee seats, the airtime, and the ear of four presidents that let him act on it. Graham was not an aberration the system tolerated. He was a product the system manufactured, promoted, and kept in stock because he was useful.

Consider the shape of the career. In March 2003, as the bombs fell on Baghdad, Graham told the country that past disagreements should give way to a shared commitment to see the effort through. The war he blessed that day killed more than a quarter of a million Iraqi civilians by the most conservative direct-death counts, birthed the insurgency that became ISIS, and left the country a wreck. He drew no lesson from it. When Libya was broken open in 2011 and left to its warlords, he had backed the intervention. When Syria was pulled apart, he had wanted deeper involvement. Across two decades, the country would be devastated, and Graham’s response to each devastation was to locate the next one.

By February of this year the next one was Iran. On the twenty-sixth, under his own Senate letterhead, Graham published an essay that reads now like a confession left in plain sight. Iran, he wrote, was facing a Berlin Wall moment. The regime was at its weakest point since 1979, and his ultimate hope was that regime change would be achieved. He described the October 7 attacks, in his own phrasing — as a silver lining, because the Israeli campaign that followed had degraded Iran’s military. He praised Trump for pursuing, in his words, peace, not war, in the same paragraphs that celebrated a bombing campaign already under way. The strikes had a name: Operation Midnight Hammer. Graham called it the largest opportunity for peace and prosperity in the Middle East in over a thousand years.

He said the quiet part in Tel Aviv, to reporters, on February 16, less than two weeks before the strikes began. The United States was on the verge of eliminating the largest state sponsor of terrorism in the region. On Fox News, days into the war, he offered the ledger in its rawest form: when the regime goes down, he said, there would be a new Middle East, and the United States would make a tremendous amount of money. Venezuela and Iran held nearly a third of the world’s known oil reserves, he noted, and the point of the exercise was a partnership with those reserves. Regime change as a real-estate transaction. He had made the trip to Israel, the UAE, and Saudi Arabia the week before to reaffirm, he wrote, that all of it was attainable and would be extremely beneficial to the United States. Weeks earlier he had met with Mossad, telling reporters they would tell him things his own government would not.

None of this cost him anything. That is the part the eulogies cannot hold in view, because to hold it in view is to indict the institutions doing the eulogizing. A senator who spent a career being wrong about the consequences of American force — wrong about Iraq, wrong about Libya, wrong about what would follow the fall of every regime he wanted to fall — was never demoted for it. He was promoted. The record of his committee assignments tells the story in the driest possible language. For years he sat on the Armed Services Committee, from which he lectured the Senate that its love for the troops bought nothing, that only appropriations did, that a colleague worried about the budget was out of touch with the world. By the time of his death he chaired the Budget Committee and sat on Appropriations — the panels that write the numbers and bless the spending. The man who wanted every war was placed, again and again, on the committees that pay for them.

Follow the money and the shape sharpens further. Graham’s donors, across a career documented in Federal Election Commission filings, clustered where his positions pointed. The defense contractors — the makers of the aircraft, the missiles, the systems — routed money to his committees and his leadership PACs. The specific career totals sit behind a paywall that blocks automated verification, and so no single figure belongs in this account. But the pattern needs no exact number to be legible. A senator who votes for every weapons system, who calls insufficient defense spending an emergency, who treats the reduction of the military budget as a moral failure, is a senator worth funding for the people who build the weapons. The contributions were not a bribe. They did not need to be. They were an investment in a man who already believed, and who sat where belief could be converted into contracts.

The media completed the machine. Graham was a fixture of the Sunday shows and the cable green rooms for a reason that had nothing to do with wisdom and everything to do with format. He was quotable, available, and reliably hawkish, which made him the perfect guest for programs that reward certainty over accuracy and confrontation over reflection. The pipeline ran in both directions. The airtime made him a national figure, and being a national figure got him more airtime, and the whole apparatus rewarded the escalation it claimed only to be covering. When he called for bombing Iran regardless of Iran’s involvement in a given attack, and told Israel to finish the job, the remarks drew condemnation abroad and bookings at home. The market for a war hawk was deep, and he supplied it.

What made Graham durable was that his convictions never had to survive an election of ideas, only the tolerance of the institutions that housed them. He denounced Trump in 2015 as a race-baiting xenophobic bigot and a jackass, and by his second term was among the president’s most consistent defenders, having discovered that proximity to power mattered more than the content of the man wielding it. The pitch that helped start this year’s war was delivered, according to reporting on the strikes, over rounds of golf. Iran was a spoiler for everything Trump wanted, Graham told him; collapse the regime and it would be Berlin Wall stuff. The president was persuaded. The bombs fell. And when a reporter asked Graham what the plan was for the day after — the question that Iraq should have burned into every hawk in Washington — he answered that it was not his job to know. The future of Iran, he said, was for the Iranian people to determine. He had wanted the war. The consequences belonged to someone else.

That was always the arrangement. The wars were his to advocate and never his to own. He would appear on the morning shows to demand them, sit on the committees to fund them, take the money from the firms that profited from them, and when they curdled into the next disaster he would be on television again, demanding the next one, his authority somehow enhanced rather than diminished by the wreckage behind him. This is not the biography of an outlier. It is the biography of an incentive structure, wearing a man’s face.

He died with the seat already in motion. Within hours, before any burial, the reporting had turned to the scramble to replace him, to the governor who will name a temporary successor, to what his absence means for a Republican majority counting every vote. Trump told NBC he already had someone in mind. The machine that made Lindsey Graham did not pause to mourn him. It began, immediately, to fill the vacancy — because the position he occupied was never really about the man. It was about keeping the seat filled by someone who would say what he said. There is no shortage of applicants. That is the dread the eulogies are built to keep you from feeling. He is gone, and nothing that produced him has changed.

***

Thomas Karat has spent a career in multinational technology corporations and is a behavior analyst holding a Master’s in Science and Communication from Manchester Metropolitan University. His work focuses on the psychology of language in power dynamics, and his graduate thesis examined linguistic deception markers in high-stakes business negotiations. He hosts a YT podcast, SaltCubeAnalytics, and publishes at karat.substack.com

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Trump financial disclosures show millions invested in major defense contractors, analysis reveals

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10/07/2026

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US President Donald Trump’s financial disclosures released last week reveal that he has invested millions of dollars in approximately a dozen companies, including weapons manufacturers and defense contractors, according to a news analysis by Responsible Statecraft. The analysis shows that Trump, through investment firms representing him, acquired shares in defense sector companies valued at a total of between $9.7 million and $24.3 million.

The companies receiving investment included Palantir, Lockheed Martin, and General Dynamics.

According to the financial disclosures, the investment firms managing Trump’s assets invested between $1.6 million and $3.9 million in the data analytics and artificial intelligence company Palantir.

The analysis noted that Palantir developed the AI-powered Maven Smart System, which is utilized in US military operations in the war with Iran. The same analysis also claimed that the company contributed to the development of software named “Big Daddy,” which is used in Israeli military operations in Gaza.

Trump’s portfolio also includes shares in Boeing. The analysis stated that Boeing sold F-15 fighter jets valued at $8.6 billion to Israel less than three months before Trump and Israeli Prime Minister Benjamin Netanyahu initiated their joint war against Iran.

According to the financial disclosures, Trump also invested in GE Aerospace, Lockheed Martin, General Dynamics, and RTX, the manufacturer of Tomahawk missiles.

The analysis wrote that weapons produced by these companies were heavily used in the war with Iran, including Tomahawk missiles used in a US Air Force strike on a primary school in the Iranian city of Minab. The report stated that at least 168 children lost their lives in this attack.

According to Responsible Statecraft, the majority of these companies received new contracts from the Pentagon aimed at replenishing US missile stockpiles depleted during the war with Iran.

RTX signed a $373 million contract for 23 Standard Missile-3 IB interceptor missiles, while Lockheed Martin was reported to have secured a $35 billion contract intended to quadruple its production of the THAAD missile defense system.

The financial disclosures showed that Trump’s investment firms also invested in shares of Kratos Defense, Honeywell, Howmet Aerospace, L3Harris, and TransDigm.

Responsible Statecraft noted that the shares of these companies gained significant value within a year of Trump returning to office. According to the analysis, in 2025, Palantir shares rose by 135%, Kratos shares by 188%, GE Aerospace shares by 84%, and RTX shares by 61%.

In April, Trump posted on Truth Social, stating: “Palantir Technologies has proven to have very powerful capabilities and equipment on the battlefield. Ask our enemies!” Following the post, the company’s shares reportedly rose by approximately 3% within a few minutes.

Financial records showed that Trump generated more than $2 billion in income in 2025. Responsible Statecraft wrote that this amount is “unprecedented” for a sitting US president.

According to the report, the majority of this income was derived from investments linked to cryptocurrency companies such as World Liberty Financial and Binance. Trump reportedly earned hundreds of millions of dollars from “memecoins” launched through these companies, though these crypto assets later suffered sharp declines in value, resulting in losses for numerous investors.

The analysis stated that Tahnoun bin Zayed al-Nahyan, the UAE National Security Advisor and brother of the UAE President and Foreign Minister, invested $500 million in World Liberty Financial and $2 billion in Binance. Trump subsequently approved the export of advanced AI chips to the UAE, a decision that the analysis indicated created the impression of being linked to the crypto investments.

According to the analysis, Donald Trump Jr. is also connected to companies operating in the unmanned aerial vehicle and defense technology sectors. Trump Jr. is a major shareholder and advisory board member at Unusual Machines, which manufactures drone components, while his investment firm also holds stakes in Powerus and Vulcan Elements, both of which hold Pentagon contracts.

Trump Jr. serves on the board of Powerus, which markets drone systems used to intercept Iranian missiles to Gulf countries, and Eric Trump is reported to hold a financial interest in the same company.

Richard Painter, who served as the chief White House ethics lawyer during the George W. Bush administration, evaluated the situation, saying: “These countries are under great pressure to buy from the president’s sons. In this way, the president will do what they want.”

When asked last year about potential conflicts of interest arising from Trump’s business activities, White House Spokesperson Anna Kelly responded: “There are no conflicts of interest.” Trump also acknowledged the existence of conflicts of interest in an interview with the New York Times earlier this year, but argued they were not important, saying: “I realized that nobody cares.”

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US Democrats split over proposed data center moratoriums amid rising energy and climate concerns

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10/07/2026

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Democrats in the United States increasingly view the rapid expansion of data centers as a critical challenge, yet the party remains deeply divided over how to address the issue.

For many Democrats, the immense energy consumption of these facilities—which drives up household electricity bills and exacerbates climate change—makes some form of restriction an inevitable policy option. The growing public unpopularity of these centers raises the political stakes for Democrats, who are seeking solutions to protect their prospects in this year’s midterm elections on promises of lowering the cost of living.

Last month, Representative Frank Pallone Jr., the top Democrat on the House Energy and Commerce Committee, called for a moratorium on data center construction. However, senior party leadership has shown little enthusiasm for the proposal.

These internal divisions are also playing out at the state level, where at least two Democratic-controlled legislatures have passed data center moratoriums. One of those measures was vetoed, while the other is currently awaiting the governor’s signature.

Support for restricting data centers does not align strictly along traditional ideological lines. A faction of anti-establishment Republicans has backed such efforts, while other members of the Republican Party continue to debate how, or even if, to regulate the massive server farms powering the artificial intelligence boom.

In Congress, Democratic leaders have repeatedly argued that data centers must pay their fair share of rising energy costs.

Earlier this year, Senate Majority Leader Chuck Schumer stated that Democrats would push for “strong, enforceable consumer protections.”

Similarly, House Minority Leader Hakeem Jeffries expressed support for technological innovation while emphasizing, “We must ensure we are protecting the American consumer.”

However, neither leader has endorsed a specific legislative proposal to achieve these objectives. Requests for comment sent to the offices of Schumer and Jeffries went unanswered.

Jeffries also told Politico that halting data center development is “certainly not a position I am articulating at this time.”

In contrast, influential progressive figures, including Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez, argue that a total moratorium on data center construction is necessary.

In March, these lawmakers introduced legislation that would ban the construction of new data centers until Congress enacts a suite of AI safety measures, ranging from government audits of AI models to protections against mass layoffs.

Pallone voiced strong support for the concept last month during a subcommittee hearing on a separate data center bill, stating he favored “a national AI data center moratorium until we can figure out a way that this is not going to harm our nation’s air, water, and utility bills.”

Following his remarks, Pallone added: “The reality is that everything with these data centers is moving so quickly, and I am concerned about the impact on electricity consumers and the environment.”

The Data Center Coalition, an industry group backed by several major technology companies, argued that a national moratorium would deter investment in the US, damage the economy, and “send the wrong message to other industries.”

“A federal mandate to halt data center construction risks restricting access to cloud and digital services, undermines our global competitiveness, and would have significant consequences for Americans’ daily lives,” the group said in a statement in late June.

Maxwell Shulman, a policy research analyst at Beacon Policy Advisors, suggested that the primary force driving the recent push for moratoriums is a “general hostility toward AI and Big Tech.”

“People see many of these changes. They are worried about AI. They are worried about the economy and their jobs, and they feel there is very little they can do about it,” Shulman said. “They view data centers not only as the physical embodiment of AI, but also as one of the rare areas where they can actually have a say or fight back.”

Shulman added: “I think moratoriums are a blunt but effective tool to demonstrate this opposition or concern toward AI in general, not just data centers.”

Meanwhile, a narrower, bipartisan bill has been gaining momentum in Congress.

The Electricity Consumers Protection Act, led by Representative Kathy Castor, a Democrat, and Representative Gabe Evans, a Republican, would require state utility regulators to establish rules ensuring that ordinary Americans do not foot the bill for new power generation and transmission lines built to support high-load consumers like data centers.

The bill passed the House Energy and Commerce subcommittee in late June and is scheduled for consideration by the full committee.

Castor said Congress should begin by establishing regulatory safeguards, though she did not rule out supporting a construction halt in the future.

“People want guardrails. They do not want their electricity bills to go up, and they are worried about water,” Castor said last month.

When asked about her stance on a moratorium, Castor added: “If we reach a point where these guardrails are not put in place and companies simply ignore them, we will have to move to that stage.”

At the state level, Democratic governors have blocked or slowed legislative efforts to limit data center expansion. In Maine, the legislature passed a bill to ban new data center construction for 18 months, but Governor Janet Mills vetoed the measure because it did not exempt an ongoing $550 million project.

New York lawmakers passed a one-year data center moratorium in June, which is currently awaiting action from Governor Kathy Hochul. According to a report by Politico, Hochul is instead considering an executive order for a shorter, six-month halt.

Other Democratic governors have actively opposed data center moratoriums.

“Walking away from a technology that will continue to propagate is leaving the table,” Representative Abigail Spanberger, a Democrat from Virginia, told Politico this week.

In California, Democratic Governor Gavin Newsom vetoed a bill that would have required planned data centers to estimate their water usage.

As broad moratoriums encounter resistance, state-level Democratic leaders are turning to more targeted solutions, such as reassessing data center tax credits. In Illinois, Democratic Governor JB Pritzker announced in June that the state would suspend its tax incentives for data centers due to energy and water concerns.

Some Republicans have adopted a similar approach. In May, Ohio’s Republican Governor Mike DeWine instructed state officials to temporarily halt the evaluation of new tax exemption requests while lawmakers review data center growth in the state.

In Virginia, lawmakers kept data center tax incentives intact after prolonged budget debates that forced a special legislative session. Spanberger instead supported the introduction of a new tax on electricity consumption.

Meanwhile, in New Jersey, Governor Mikie Sherrill signed legislation this week that places data centers into a separate category of electricity consumers. The governor’s office stated that the measure will ensure data centers pay for their own energy use and the associated infrastructure.

Commenting on the dynamics facing state leaders, Shulman said: “There is a massive amount of investment potential and a lot of potential jobs at stake. And I really think these Democratic governors do not want to shoot their own states in the foot in the race to capture these jobs.”

Shulman added: “The goal for a Democratic governor is to send a policy signal strong enough to make voters feel they are taking a tough stance on AI, or addressing its potential negative consequences, while still trying to attract as much investment and as many jobs as possible.”

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