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The economic mind of Trumpism — 1: Stephen Miran and his dollar devaluation plan

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US President Donald Trump’s decision to initiate a trade war and impose tariffs impacting the global economy prompted accusations of “irrational economic policies”—a critique often heard in Turkey.

According to this perspective, Trump was perceived as a reckless autocrat imposing tariffs out of sheer ignorance. Alternatively, as renowned “new Keynesian” economist Paul Krugman stated, Trump was “crazy” regarding trade, and his “malignant stupidity” threatened the global economy.

This analysis does not attribute vast knowledge or profound wisdom to Trump, as subsequent points will clarify. Furthermore, the method for determining the tariffs has been described as somewhat “childish.” Additionally, this series will later delve into significant objections to “Trumponomics” and its inherent contradictions.

However, certain complexities may lie beyond Trump’s personal grasp, necessitating his team of advisors. If not a mad autocrat, perhaps Trump resembles an uninformed elephant in a china shop—useful, in this view, precisely for his capacity to disrupt the status quo.

Consequently, there are indications suggesting some underlying “intelligence” behind events like the rapid evaporation of trillions of dollars from stock markets within a week. Historical parallels exist. In his memoirs, President Herbert Hoover recalled his Treasury Secretary during the Great Depression, Andrew Mellon, advising: “Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… [The Depression] will clean out the rot in the system. The high cost of living and the high level of living will fall. People will work harder and live more moral lives. Values will adjust and enterprising people will pick up the debris of less competent people.”

The White House summary accompanying the official announcement of global tariffs highlighted a familiar, ostensible policy rationale: the so-called globalization process, it argued, no longer served the interests of the US and American workers, particularly within the manufacturing sector. This justification aligned with efforts toward reshoring production and implementing domestic tax cuts.

This, naturally, represents the surface narrative. Delving deeper, three figures emerge as prominent sources of “economic wisdom” within Trump’s White House: Stephen Miran, Chairman of the White House Council of Economic Advisers; Scott Bessent, Secretary of the Treasury; and Peter Navarro, Trade Representative.

This article focuses on a 41-page report authored by Miran—then a strategist at Hudson Bay Capital, a hedge fund managing $30 billion—published in November, shortly after Trump’s election.

In the memorandum, titled “Guidelines for Restructuring the Global Trading System,” Miran aimed to persuade “markets” of the feasibility of tariffs.

Miran began, “We may be on the verge of a generational shift in the international trade and financial systems,” noting that ‘reforming the global trading system’ and ‘the desire to put American industry on a fairer footing vis-à-vis the rest of the world’ had been a ‘consistent theme’ for Trump for decades.

“There is a way in which these policies can be implemented without significant negative consequences, but it is narrow,” the strategist stated, acknowledging the difficulty of the task.

But here the core argument surfaces: “Economic imbalances are rooted in an overvalued dollar that prevents international trade from stabilizing, and this overvaluation is driven by inelastic demand for reserve assets. As global GDP grows, financing reserve assets and the defense umbrella becomes increasingly burdensome for the United States, with the manufacturing and tradable sectors bearing the brunt of the costs.”

This overvaluation, according to the argument, renders US exports less competitive, cheapens imports, and consequently undermines American manufacturing—the fundamental points being made.

This assessment of the dollar, I should note, is more prevalent than commonly assumed, a point discussed recently with economist Radhika Desai. Furthermore, reports indicate that Vice President JD Vance shared a similar perspective, attributing the dollar’s overvaluation to its global reserve currency status.

As will be discussed, a consensus apparently exists between Miran and Bessent that tariffs alone are insufficient. Miran explicitly writes about desiring an “adjustment”—specifically, an exchange rate realignment between the dollar and foreign currencies: “While currency offsets can impede the harmonization of trade flows, they show that tariffs are ultimately financed by the tariff-subject country, whose real purchasing power and welfare are reduced, and the proceeds improve burden sharing to provide reserve assets.”

The implication is that the negative impacts of tariffs are offset because the burden shifts. According to Miran (who holds a Harvard PhD in economics), this mechanism would not harm the purchasing power of American consumers. Instead, as citizens of exporting nations targeted by US tariffs face reduced purchasing power due to currency shifts, their country effectively ‘pays’ the tariff burden, while the US Treasury gains the revenue.

Miran stated, “From a trade perspective,” the dollar’s overvaluation stems “‘largely because dollar assets function as the world’s reserve currency.’” This aligns with the argument attributed to JD Vance.

Since the US supplies the world with reserve assets, demand exists for the dollar and US Treasuries independent of trade balancing needs or the optimization of risk-adjusted returns. These reserve functions facilitate international trade and offer a vehicle for substantial savings pools, frequently held for “policy reasons” (like reserve or currency management, or by sovereign wealth funds) rather than purely for yield maximization.

Consequently, much of this reserve demand for dollars and US bonds is inelastic concerning economic or investment criteria. Miran provided an example: Treasury bonds purchased to guarantee trade between Micronesia and Polynesia are acquired irrespective of the US trade balance, recent employment data, or the relative yield of Treasuries compared to German Bunds [government bonds].

Such phenomena, the advisor noted, reflect what can be termed a “Triffin world,” named after Belgian economist Robert Triffin. In this framework, reserve assets constitute a form of global money supply. Demand for these assets is driven by global trade and savings levels, rather than the reserve-issuing country’s domestic trade balance or investment appeal.

Within this model, the US runs large current account deficits not primarily because it imports excessively, but rather because it must import sufficiently to issue the US government bonds needed to supply reserve assets and thereby facilitate global growth.

According to Miran, reserve currency status yields three significant consequences for the issuing nation: somewhat cheaper borrowing costs, a more expensive currency, and the capacity to leverage the financial system for security objectives.

This overvaluation, Miran argued, imposes a heavy burden on the American manufacturing sector while simultaneously benefiting the economy’s financialized sectors, primarily advantaging wealthier Americans. The hedge fund manager’s critique of the financialization trend characterizing the past 40 years of capitalism sounds almost left-leaning.

Miran further clarified that the issue involves a “response to a crisis.” During crises, the dollar’s reserve nature places additional strain on manufacturing and export sectors. The dollar typically appreciates during recessions due to its “safe” haven status, while other currencies tend to depreciate during economic downturns.

Consequently, when aggregate demand declines, the difficulties faced by export sectors are exacerbated by a sharp erosion of competitiveness. This dynamic helps explain why US manufacturing employment often falls sharply during recessions and struggles to recover substantially afterward.

However, a contradiction arises: President Trump reportedly valued the dollar’s reserve status and even threatened punitive action against countries, notably the BRICS group, that might reduce their reliance on the dollar. How can this tension be reconciled? Miran proposed “a set of policies to increase burden-sharing among trade and security partners.” He elaborated: “Instead of trying to end the use of the dollar as the global reserve currency, the Trump Administration could try to find ways to claw back some of the benefits that other countries derive from our reserve status. A redirection of aggregate demand from other countries to America, increased revenue to the US Treasury, or a combination of these could help America offset the rising cost of providing a reserve asset for a growing global economy. The Trump Administration is likely to increasingly intertwine trade policy and security policy, seeing the provision of reserve assets and the security umbrella as interdependent and approaching burden-sharing for them together.”

As mentioned earlier (paragraph 25), reserve currency status has three key elements. One is the capacity to control financial flows. According to Miran, the negative consequences (like diminished export capacity) were historically balanced by the advantages of US dominance over global finance. This financial control conferred a “geopolitical advantage,” allowing the US to pursue national security goals cost-effectively. The US provided a global defense shield for “liberal democracies,” receiving the benefits of reserve status in return. In essence, reserve status has long been interwoven with national security considerations.

Miran suggested that Trump was reacting to a perception that these arrangements had become burdensome for the US. “This connection helps explain why President Trump thinks other countries benefit from America in defense and trade at the same time: the defense umbrella and our trade deficits are linked through currency,” the consulting economist wrote. He further explained: “In Triffin’s world, this [global] arrangement becomes more difficult as the United States’ share of global GDP and military power shrinks. As the economic burdens on America increase, with global GDP outstripping American GDP, it becomes more difficult for America to finance global security because the current account deficit grows and our ability to produce equipment is undermined. The growing international deficit is a problem because of the increasing pressure on the American export sector and the resulting socio-economic problems.”

The US is either unable or unwilling to sustain the existing global arrangement and therefore seeks to alter it. This constitutes Miran’s first key point.

The US dollar functions as a primary reserve asset largely because America offers “stability, liquidity, market depth and the rule of law.” These attributes underpin the nation’s capacity to project power globally and to shape and defend the international order. This is Miran’s second key point.

The link between reserve currency status and national security is long-established. As the Trump administration sought to reshape the global trading system, these connections were expected to become even more salient. This represents the third key finding. Therefore, the situation entails more than simply a move toward economic isolation for the dollar and the US.

Both tariff and exchange rate policies, in this framework, aim to enhance the competitiveness of American manufacturing, thereby strengthening the industrial base and shifting aggregate demand and jobs from other countries to the US.

Miran emphasized that the goal was not to repatriate labor-intensive sectors like textiles from countries such as Bangladesh. Rather, the tariffs were intended to preserve American dominance in high-value-added industries, halt the further exodus of manufacturing, and create negotiating leverage. This leverage could be used to compel other countries to open their markets to American exports or to better protect American intellectual property rights. Key sectors linked to national security included semiconductors and pharmaceuticals.

Yet, the fundamental contradiction persists. Miran, however, expressed confidence in the Trump administration’s approach. Acknowledging the inherent tension, he wrote: “Despite the dollar’s weight on the US manufacturing sector, President Trump has emphasized the value he places on its status as the global reserve currency and threatened to punish countries that move away from it. I expect this tension to be resolved through policies that seek to preserve the dollar’s status but improve burden sharing with our trading partners. International trade policy will seek to recapture some of the benefits to trading partners of our reserve status and link this economic burden sharing to defense burden sharing. Although the effects of Triffin will have a negative impact on the manufacturing sector, there will be attempts to improve America’s position in the system without destroying it.”

Burden sharing: Pillar of restructuring

In his inaugural speech as Chairman of the White House Council of Economic Advisers, Stephen Miran revisited the themes from his November report.

Miran elaborated on the specifics of burden sharing, arguing that other nations should shoulder a greater portion of the costs associated with the global “public goods” the US has historically provided.

Within the economic framework of Trumpism, as articulated by Miran, the United States was portrayed as a “sucker”—providing a global reserve currency and a worldwide defense umbrella without receiving adequate reciprocation from other nations.

“President Trump has made it clear that he will no longer tolerate other nations freeloading on our blood, sweat and tears, whether in the area of national security or trade,” President Miran said at the Hudson Institute.

He continued, “While it is true that the demand for the dollar has kept our borrowing rates low, it has also distorted foreign exchange markets. This process has imposed unnecessary burdens on our companies and workers, making their products and labor uncompetitive on the global stage.”

Miran acknowledged the benefits of financial hegemony but contended the associated burden on the US had become excessive. He argued that other nations invested in American assets and manipulated their currencies to gain export advantages. Furthermore, he attributed partial blame for the 2008 financial crisis to Beijing, asserting that China had fueled the preceding bubble by purchasing vast quantities of US mortgage-related debt.

Miran proposed five specific options for achieving burden-sharing:

First, other countries could accept tariffs on their exports to the US without retaliating, thereby providing revenue to the US Treasury to help finance global public goods.

Second, they could cease perceived unfair and harmful trade practices by opening their markets further and increasing purchases from America.

Third, they could increase their defense spending, including procurement from the US. Purchasing more US goods would theoretically ease the burden on American military personnel and create domestic jobs.

Fourth, foreign nations could increase investment in America, including building factories. Goods produced domestically would not be subject to the proposed tariffs.

Fifth, they could directly contribute to financing global public goods by “writing checks” to the US Treasury.

Miran concluded: “Burden sharing can ensure that the United States can continue to lead the free world for decades to come. This is an imperative not only for fairness, but also for viability. If we do not rebuild our manufacturing sector, we will struggle to provide the security we need for our safety and to support our financial markets. The world can still have the American defense umbrella and trade system, but it must start paying its fair share for them.”

Interpretation: The underlying message is that the entire world—all other capitalists included!—must participate in reconstructing the American economy. This, the argument implies, is necessary to break the deadlock in the global capitalist system, allowing the US to resume its role as a global ‘gendarme’ guaranteeing capital accumulation and protecting the interests of propertied classes internationally.

The subsequent article in this series will examine the perspective of Scott Bessent, identified here as Treasury Secretary.

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The system that needed Lindsey Graham

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4 hours ago

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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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3 days ago

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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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