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The economic mind of Trumpism – 3: American industry and Elon Musk’s robotic humans

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“The dollar’s continued role as the dominant ‘safe’ currency requires the US economy to adapt to what economist Dani Rodrik describes as the inherent contradiction between global integration and national sovereignty. Rodrik states that countries prioritizing greater global integration must relinquish control over their domestic economies, whereas countries preferring to retain local control must limit the extent to which their economies are open to trade and capital flows.

(…)

Because domestic and external economic imbalances must always be aligned in every country. When some countries restrict capital and trade flows to control their external imbalances and maintain favorable domestic conditions, they can impose their own domestic imbalances on trading partners who have less control over their trade and capital accounts. British economist Joan Robinson called these trade policies ‘beggar-thy-neighbor’ and said they would ultimately lead to an increase in global trade conflicts.

(…)

The dollar’s dominance in global trade and finance was long assumed to provide a net benefit for the American economy, but this assumption is increasingly being questioned. While it benefits Wall Street and owners of globally mobile capital, these benefits come at a cost to American manufacturers and farmers.

In a world where some countries actively manage their external imbalances while others do not, the role played by the US dollar as the primary safe currency has made America the main culprit for global economic distortions. Addressing these imbalances requires a fundamental re-evaluation of the rules governing global trade and capital flows.”

These lines were published in the Financial Times under the byline of Michael Pettis. Pettis works as a specialist at the renowned American think tank Carnegie. My reason for starting with such a long quote is to emphasize that the ideas embodied by Stephen Miran and Scott Bessent in the first two parts [of this series] are being discussed much more widely than assumed, even within the “mainstream.” As the article’s title already suggests, according to Pettis, “the US would be better off without the global dollar.”

Advisor Miran and Secretary Bessent call this the rebalancing of global trade/the economy. Have we seen similar examples before?

Some economists believe we have, pointing to the major transformation during the Richard Nixon-Ronald Reagan eras. For example, Yanis Varoufakis, in an article he wrote for Unherd following the “Liberation Day” tariffs, quotes John Connally, who served as Nixon’s Treasury Secretary in 1971. To persuade the President towards the “Nixon shock,” Connally said, “My philosophy, Mr. President, is that all foreigners are waiting there to screw us, and our job is to screw them first,” and underlined that his aim was to trigger a “controlled disintegration” of the world economy.

Varoufakis believes that the Nixon shock was much harsher than the Trump shock, especially for Europeans, and that it achieved its goals much more completely when considered in terms of its long-term consequences. This outcome was: to expand the US trade and budget deficits in order to maintain and extend American hegemony.

At this point, I recall that we wrote about the tight link between national security policy and the economy, even during the “neoliberal” era. Indeed, Varoufakis also quotes the infamous Paul Volcker, one of Nixon’s advisors, who persuaded Connally towards the “shock”:

“It is tempting to view the market as a neutral arbiter. But a number of countries, including the United States, balancing the requirements of a stable international system with the desire to preserve freedom of action for national policies, chose the latter.”

It was time for Western Europe and Japan to accept that their “economic miracles” created after the Second World War were coming to an end. The “controlled disintegration” of the world economy was a legitimate goal for the US.

The infamous Volcker, who became Fed Chairman, shattered the fixed exchange rate regime and sent interest rates skyrocketing in a single move that would go down in history as the “Volcker shock.”

“Therefore, Trump,” says Varoufakis, “is not the first President to seek a controlled disintegration of the world economy through a destructive blow.”

The former Greek finance minister makes an important observation: Deliberately harming US allies to renew and extend US hegemony; being ready to inflict short-term damage on Wall Street to strengthen capital accumulation in the US in the long run… These were not things we were encountering for the first time either. Nixon had done this; before him, President Hoover’s Treasury Secretary Andrew Mellon had done it. “Retreating to leap” was one way to guarantee capital accumulation.

This means that Trump and his team are seeking ways to save American hegemony once again, which began with the Nixon shock and was subsequently secured by the Carter and Reagan administrations. Again, the targets are the devaluation of the dollar, a slight trip-up for Wall Street, and demanding that “foreign capitalists” pay the price.

So what will this world look like if he succeeds? Varoufakis has an answer, which is worth reading even though it’s a long quote:

“Perhaps it is too early to say, but neoliberalism has already been challenged by the techno-feudal faith of neo-reactionaries like Peter Thiel. Cloud capital is replacing financial capital, putting the holy grail of the transhuman condition (the fusion of cloud capital, artificial intelligence, and the biological individual) in place of the market’s divine role. Financialization will soon be under similar pressure. As AI develops, Wall Street will not be able to continue resisting the fusion of cloud capital and finance, as seen in Elon Musk’s ambition to turn X into an “everything app”. Such developments will do to payments what the internet did to fax machines, and will have serious implications for financial stability, including any future role for the Federal Reserve. And instead of the dream of the Global Village, we shall have the Walled Nation. However, the retreat of globalisation does not mean that autarky is possible. The Trump Shock is pushing us towards a bifurcated planet; one part of which consists of vassal states bowing to the Trump Plan, while the other consists of countries allowed to pursue the BRICS experiment on their own trajectory.”

It’s not entirely clear whether the picture Varoufakis paints is optimistic or pessimistic. But the problems of a “rebalancing” focused on the dollar’s value surface with every tariff Trump imposes (and withdraws!).

The White House says it imposes tariffs to bring manufacturing back to the US (reshoring). But does this tool serve the purpose of rebalancing? The answer is most likely no.

For example, tariffs on aluminum and steel, which are basic intermediate inputs for manufacturing, do not seem likely to rebalance the US economy towards more manufacturing.

Companies are expected to absorb some of the tariff costs and pass the rest on to consumers. According to some estimates, the additional cost of just automobile tariffs could mean a price increase of $5,000 to $10,000 per vehicle. Former Treasury Secretary Larry Summers calculates that the overall net effect of the tariffs would cost a family of four approximately $300,000.

Furthermore, the lack of certainty, the inability to see the economic impact of tariffs that are sometimes imposed and sometimes paused, and the failure to combine this entire “reshoring” goal with an appropriate state incentive strategy are leading the American economy towards recession. For example, along with the “Liberation Day” tariffs, Trump and DOGE ended the Manufacturing Extension Partnership (MEP) program, which had supported the American manufacturing sector for decades. MEP was established by Congress in the 1980s, at the height of the US trade war with Japan, to provide advice to small American manufacturers.

MEP provided taxpayer-subsidized consulting services to thousands of businesses in all 50 states, including manufacturers of ovens, printers, tortillas, and dog food.

Moreover, this shock is being felt not only in financial markets but also in the “real” economy. In March, the Purchasing Managers’ Index (PMI) was below 50 (49). According to the Washington Post, manufacturing trade groups say they are inundated with calls from members concerned about canceled orders and slowing growth.

Almost all groups in the manufacturing sector say they are facing higher costs for basic materials or machinery, and several say they have already seen demand “drying up” due to tariff-related uncertainty.

It is a fact that the share of manufacturing in the US economy, as well as the proportion of American workers employed in factories, has hit rock bottom. However, this fact also obscures some other realities: Although the number of workers employed in manufacturing has remained stagnant, manufacturing output continues to increase; in other words, productivity is rising. Developments in automation are progressing in parallel with the general laws of capital accumulation.

Furthermore, although not on the scale of “reindustrialization,” we can track from statistics that there has been a partial manufacturing revival since the 2008 crisis: In the 20 years from 1990 to 2010, the share of the manufacturing sector in employment had fallen from 16 percent to 9 percent. However, this steady decline, which had been ongoing since 1953, slowed considerably from 2010 onwards.

In the 15 years since 2010, manufacturing’s share of total employment has fallen by only one percentage point, from 9 percent to 8 percent. The reason for this is that, excluding the Covid years, the number of manufacturing jobs in the US increased from 2010 to 2022.

For example, some writers like Dan McLaughlin point out that manufacturing has shifted regionally from the Midwest and has actually migrated to the South rather than going abroad; they also point to major developments in automation, which mean that factories can produce more with fewer workers today.

McLaughlin writes:

“Just as previous generations who hated factory jobs romanticized farming, there is a tendency to romanticize manufacturing work. We can acknowledge the real human cost of closed factories and still recognize that not every manufacturing job is equally appealing compared to its alternatives: many blue-collar men would likely prefer driving an Amazon delivery truck or working on a construction site to working in a textile mill. Furthermore, economic populists tend to confuse manufacturing jobs with manufacturing capacity. They say it is dangerous for our national security if we can no longer produce things.”

Moreover, relatively few Americans actually want to work in a factory. According to the Financial Times, recent polls show that 80% of Americans think the country would be better off with more manufacturing jobs, but only 25% think they personally would be better off in such jobs.

On the other hand, tariffs are pushing buyers of custom manufacturing services to rapidly reorganize their supply chains, including turning to American suppliers to build their products.

The “SME” strategy is becoming critical here. US small and medium-sized manufacturers also want to benefit from this period and grow their customer base both domestically and abroad.

The US is home to over 500,000 SMEs specializing in everything from CNC machining and injection molding to sheet metal fabrication, 3D printing, and more.

In recent years, buyers have accelerated reshoring efforts, spurred by COVID-19, federal legislation such as the Infrastructure Investment and Jobs Act and the CHIPS and Science Act, and now the global trade environment.

Xometry, which serves as a “digital marketplace” for custom manufacturing, has been tracking the reshoring trend for over two years through its quarterly “Resurgence of American Manufacturing” surveys conducted with Zogby Strategies.

According to the data, in the first quarter, nearly half (42%) of manufacturing CEOs said they had successfully “reshored” facilities, while 19% stated they planned to do so as a result of tariffs.

It is precisely at this point that the trend of “Silicon Valley-ization” appears to be enveloping the entire economy like an octopus: 70% of manufacturing CEOs are adopting emerging technologies like artificial intelligence to achieve efficiency in planning and operations, with automation closely following.

Most of these companies investing in AI have achieved a significant return on investment, and nearly two-thirds (63%) believe that AI and other technologies will be “transformational” for their operations.

In addition to technology, as America’s industrial core becomes more high-tech, manufacturing CEOs are also investing in “talent.”

On the other hand, a survey by the National Federation of Independent Business (NFIB) reveals that in March, even before Trump declared the “Liberation Day” tariffs, small business optimism experienced its sharpest drop since 2020; it should, of course, be noted that Republicans were more optimistic than Democrats.

The new tech brokers, whom Varoufakis calls “techno-feudals,” are using the Trump administration as a tool to transform the economy with artificial intelligence, automation, and digitalization.

“President Trump is a successful businessman who has spent decades building productive and successful companies. He knows that the real bosses are the American taxpayers and will continue to demand the high level of dedication and excellence that the American people deserve from all government employees.”

White House spokesperson Anna Kelly says this. The same Trump, as the “CEO of the US,” says regarding personnel cuts in the federal government, “everyone is replaceable.”

Billionaire Musk, Trump’s biggest supporter, says, “You can’t change the world on 40 hours a week.” When asked, “How much do you need?” he doesn’t hesitate: “It varies by person, but about 80 [hours] consistently, sometimes over 100. The pain level increases exponentially above 80.”

If you work 7 days a week, that amounts to 14 hours a day. What Musk and Trump mean by “bringing production back to the US” seems to be like the “factory system” of the 19th century, where English workers were worked to death.

The “transhuman” robot fantasy points not to a system where production is done by humanoid robots, but one where humans are made robotic.

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

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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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