A leaked draft of Trump's AI executive order reveals the most aggressive federal power grab yet against state regulation. The document, obtained by The Verge, shows how the administration planned to weaponize everything from broadband funding to FTC enforcement to crush state AI laws - with tech billionaire David Sacks pulling the strings on every decision.
The tech industry's dream of killing state AI regulation just got exposed in the most brazen way possible. A leaked draft executive order from the Trump administration reveals a coordinated federal assault on states like California that dare to regulate artificial intelligence - and it puts tech billionaire David Sacks at the center of every decision.
The leak itself tells a story. Trump's second-term White House runs on loyalty, not the chaos of anonymous sources that defined his first presidency. When actual documents surface, someone powerful wanted them out there. And this particular draft order gave Sacks, Trump's Special Advisor on AI and Crypto, consultation rights on every single directive - a power play apparently offensive enough to break Trumpworld's code of silence.
The Verge obtained the full draft, which reads like a regulatory hit list targeting state AI laws. The plan doesn't directly ban state regulations - executive orders can't override state law - but creates what legal experts call a "chilling effect" through financial punishment and federal litigation.
The Commerce Department would compile a blacklist of "onerous AI laws" that conflict with federal policy. States making the list face immediate consequences: $42.45 billion in broadband funding from the BEAD program could vanish overnight. But that's just the opening shot.
Section 5(b) of the draft order instructs "all other agencies" to review their discretionary grants for potential withholding from states with targeted AI laws. We're talking hundreds of billions in federal funding - highway money, education grants, everything. As Charlie Bullock from the Institute for Law and AI explained to The Verge, "Even if states succeed in suing, it could take a while for them to get that money. Even the delay in receiving funding could be impactful."
The Department of Justice gets tasked with creating an AI litigation task force specifically to sue states over their AI regulations. Meanwhile, the FTC receives new marching orders to target what the order calls "woke AI laws" - like Colorado's algorithm discrimination protections - by claiming they violate federal consumer protection rules through requiring "untruthful outputs."
Most unusually, the FCC gets dragged into AI regulation despite having no clear authority in the space. The draft directs the FCC chairman to "initiate a proceeding" on federal AI reporting standards that would preempt state laws. Legal experts are baffled by this provision since telecommunications law doesn't cover AI models.
