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The economic mind of Trumpism — 2: Scott Bessent, the American Dream, and the beauty of the private sector

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In his first major economic policy speech as US Treasury Secretary, Scott Bessent outlined what he saw as the Trump administration’s plan to free the American economy from “dependence on the state” and steer it towards “private sector-led growth.”

Speaking at the Economic Club of New York last March, Bessent, a former Soros Fund manager, made it clear that President Donald Trump intended to pursue deregulation, implement permanent tax cuts, and use tariffs as a strategic tool to strengthen American industry.

With this shift, Scott Bessent aimed to reverse what he described as the previous administration’s “overreach.”

According to Bessent, previous governments pursued an overly “statist” economic policy, which hindered innovation and productivity. Therefore, and predictably, state intervention in the economy needed to be reduced.

Pointing to data showing that over 95% of job growth last year was concentrated in the public and government-adjacent sectors, Scott Bessent argued that these sectors offered slower wage growth and lower productivity compared to private sector jobs.

From ‘bureaucracy’ to ‘risk-based’ regulation

Bessent claimed:

“The American economy has been artificially propped up by government spending and public sector job growth. We are focused on returning to a private sector-led economy where businesses drive job creation, investment, and innovation.”

To facilitate this transition, the administration planned to suspend the Corporate Transparency Act, which Bessent claimed imposed unnecessary reporting burdens on small businesses.

Bessent also reiterated Trump’s commitment to permanent tax cuts, reduced corporate tax rates, and expanded small business deductions to encourage investment and entrepreneurship.

The Secretary also announced that they would make a “comprehensive and ambitious effort” to liberalize the financial sector to enable banks to play a more active role in driving economic growth.

The administration was particularly focused on overhauling how financial institutions are supervised, aiming to move from what Bessent described as a “bureaucratic checkbox” approach to a more “risk-based” regulatory approach.

According to the Treasury Secretary, tariffs have three goals

The core of the speech was Scott Bessent’s defense of an aggressive trade policy, stating that tariffs were not just about protectionism but about creating a “more competitive and resilient US economy.”

Dismissing concerns about potential inflationary effects, the Secretary argued that tariffs served three main purposes: generating revenue, protecting American industries and workers from unfair practices, and serving as a strong negotiating tool in trade talks.

“As President Trump has said many times, ‘Tariff is my favorite word’,” Bessent said. “If trade partners retaliate, they will face even higher taxes. But if they want to negotiate, we are happy to talk.”

Bessent also dismissed criticism of this policy, emphasizing that Trump’s trade policies were designed to re-establish the US’s economic power on the global stage.

From ‘Lehman moment’ to ‘let the markets sort it out’

Addressing investor concerns, Bessent also made it clear that the administration had no intention of intervening in the stock market to prevent declines. This position indicated that the American government was not considering a “Lehman moment” as in the 2008-9 crisis, but rather relying on the “markets will sort it out” logic.

Indeed, Bessent, referring to the Trump administration’s focus on bond yields rather than stock prices as an indicator of “economic health,” simply stated, “Trump’s upward call is simple: if we have good policies, then the markets will rise.”

Bessent also suggested that Trump’s economic policies, particularly the “re-privatization” of the economy, would contribute to lower interest rates and increased long-term market confidence.

One of the goals the Trump administration set for itself was to convince investors that market-determined interest rates should fall. High-level members of the American economic administration particularly want to lower the yield on ten-year Treasury bonds.

Bessent argued that the Trump administration could lower yields by reducing energy prices and easing regulations. The Secretary also downplayed the sell-off in US Treasury bonds after the tariff shock, saying it was not a “systemic problem.”

“There’s one of these deleveraging tremors going on in the markets right now,” Bessent said, adding that he had witnessed them frequently in his decades-long hedge fund career: “There are very large leveraged players who are experiencing losses in this fixed income market and are being forced to deleverage.”

The obstacle to the American Dream: Workers’ access to cheap goods…

“Access to cheap goods is not the essence of the American Dream. The American Dream is based on the concept that every citizen can achieve prosperity, upward mobility, and economic security. For too long, the designers of multilateral trade agreements have overlooked this.”

The natural consequence of this claim would be to push the “fight against inflation” program to the back burner. This is indeed the case: Bessent indicated this in his speech at the Economic Club of New York, saying, “On a continuum, I am not worried about inflation.”

“Wall Street has done great things, Wall Street can continue to do good things. But this administration is about Main Street.” These words of Bessent are a goal that Trump also frequently expresses: “Main Street” means focusing on production, shopkeepers, stores, and retail sales. Bessent repeats this “polish” of Trump’s as it is.

Time for an economic ‘detox’: The rebalancing account

When tariffs were first announced in March, Trump was asked if there was a risk of recession, and the President acknowledged in response that there would be a “transition period” in his policies.

Speaking after Trump, Scott Bessent suggested in an interview with CNBC that the bottom 50% of American workers were “dead,” and that the top 10%’s share of consumption was close to 40%, 50%, and spoke of ending this imbalance:

“Look, there will be a natural adjustment as we transition from public spending to private spending. The market and the economy have become hooked, and we have become dependent on this government spending, and there will be a period of detox. There will be a period of detox.

(…)

Look, there is an adjustment. We’ll see if it’s painful. What we’re trying to do, I talked about this yesterday at the Economic Club of New York. We’re trying to move from the public sector to the private sector. I talked about how we will have safe and sound regulations to get our banking system working again. So banks should lend to private companies. Employment should come from private companies, not the government. I’m confident that if we implement the right policies, it will be a very smooth transition.”

Scott Bessent always emphasizes that this is an “adjustment process.” Referring to Ronald Reagan and Jimmy Carter, he acknowledges that there were some turbulences during that period (which we will address in the next part of the series), but he emphasizes that these presidents “stayed the course,” and that they too will stand by the course they are following.

Bessent told the CNBC host that “this unsustainable system has been built for years,” adding that the previous “unsustainable system” of trade was also responsible for today’s economic uncertainties:

“Our trade partners have taken advantage of us. We can see this in large budget surpluses. We can also see this in large budget deficits.”

An elegy for globalization?

In an article published in The Economist in October, Scott Bessent stated that globalization had triggered rising inequality in the US, leading to growing social and economic disparities.

“Western middle- and working-class populations are becoming increasingly wary of globalization,” wrote the financial executive who would later become Treasury Secretary, “The only way to preserve the benefits of the international trading system is to question some of the system’s flawed assumptions and update it for the current situation.”

Starting the same article, Bessent’s call for strong links between international economics and trade policies and security will not be surprising to those who read the first part of the series. This idea, that national security and the economy and trade are inseparable, is not unique to this period; in the “neoliberal” era, American national security was also tied to the international economic system. People like Stephen Miran and Bessent want to emphasize this more strongly, highlighting that the old configuration no longer works in favor of American national security. Bessent writes:

“The United States must play a more active role in reshaping the international economic order. Abandoning the international trading system entirely would be a disaster for the American people and our allies. However, the current situation creates security vulnerabilities, and the total economic benefits for the United States are uncertain. America’s next generation of international economic policy must more closely link security relationships and economic relationships to deliver the benefits that truly free trade can bring. Adjustments are needed, but they must be carefully calibrated and consciously accelerated.”

Because of globalization: 1) China has risen, 2) the structure of the American economy has been disrupted, changing the balance of power with US adversaries. These are Bessent’s theses. While international economic integration, open markets, and globalization helped curb inflation by significantly increasing the short-term efficiency of the global economy and reducing the cost of goods, the effects of trade liberalization on “distribution” were ignored, and inequality in America worsened.

The adjustment process largely did not happen, leading to persistent imbalances in the global economy. “The desired balance,” Bessent wrote, “has been hindered by the deliberate policy choices of foreign governments, particularly China, but also Japan, South Korea, and other export-dependent economies.”

Seeking an update to the international trade and security system

As we mentioned above, Scott Bessent advocates for reorganizing, not abandoning, the international trade system.

According to him, despite its many flaws, abandoning the international trade system would be a major economic and strategic mistake. Instead, the US will adopt policies aimed at correcting the sources of “imbalances” in the international economy.

Needless to say, these measures must, of course, “act on a global basis,” as bilateral actions largely circumvent the underlying source of imbalances rather than addressing them.

Bessent therefore finds the discussions about “industrial policies,” which are a hallmark of the Joe Biden era, misplaced, seeing them, of course, as “statist,” and writes:

“Macroeconomic interventions, such as broad-based tariffs, will be more effective than microeconomic interventions, such as industrial policy, which often rely on the government picking winners and losers.”

The US should also intervene with its allies in this direction: moves that will close the American current account deficit. America’s security guarantees and market access should also be linked to allies’ commitments to spend more on “common security” and structure their economies in a way that reduces imbalances over time; this is Bessent’s proposal:

“Such a linked system of security and economic alliances must be dynamic to incentivize behavior consistent with American interests. Countries can move closer to or further from the center of this system of relationships based on the choices they make.

A clearer compartmentalization of the international economy will provide more effective leverage to confront the underlying sources of imbalances than the currently dominant bilateral approach. Furthermore, the cost of remaining outside the periphery will be high. Without access to US markets, China’s excess capacity will threaten the viability of domestic production in other countries. Moreover, it is unlikely that hegemons outside the US-led region will be as benevolent as the US was in the post-war period.”

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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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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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