The Senate continues to propose and debate amendments to the One Big Beautiful Bill (OBBB) as the self-imposed July 4th deadline for Congress quickly approaches. Fortunately for American consumers who use AI, the Senate has agreed to compromise language on the AI moratorium.
The AI moratorium is not perfect—but it is a good first step. Once the dust settles on the reconciliation package, the next order of business should be to draft and pass a federal framework that guarantees targeted protections for consumers as specific harms become more clear.
As the Senate finesses final details of the moratorium, Congress must understand that artificial intelligence is neither a passing trend nor a doomsday terminator; it’s a positive scientific breakthrough with life-changing potential. It is already transforming education and healthcare for the better and putting new skills like coding into the hands of more working professionals. The new tech is rapidly diffusing through every part of the modern economy.
Unfortunately, poor governance is building out a disjointed patchwork that threatens AI’s positive impacts.
In 2025, over 1,000 bills regulating AI have been introduced at the state level, many of which would smother the industry in complex compliance regimes, slowing the development and diffusion of products and services to consumers. While interstate cooperation was hailed as a path to a cohesive national framework, efforts of about two dozen states specifically on algorithmic fairness legislation resulted in a discordant collection of bills that are, on average, only 35-51 percent similar. If a small collection of bills that were intended to work together are so dissimilar, the rest of the 1,000 are likely even more incompatible.
Most of these 1,000 did not pass, but some did, and even more are on the way. As a result, AI developers and businesses must navigate different requirements for each state. Such a regulatory environment threatens to drown AI development and deployment, save for Big Tech actors who have the resources to stay afloat. Keep in mind: the moratorium is about helping the little guys—those who cannot afford to comply with the cost of conflicting rules and laws.
Fortunately, the moratorium as constructed will give states pause on further contributing to the ongoing patchwork issue. By pausing all enforcement of AI-specific laws, Congress can give the industry—both big and small—breathing room to continue improving the nascent tech. Notably, the proposed moratorium would still allow existing criminal penalties to apply—fraud is still fraud regardless of whether AI was used or not. But harmful, fear-based regulatory schemes that specifically target AI would be defanged if states trade AI regulations for conditional funding.
A moratorium is a sensible way to safeguard progress. But putting a moratorium on states does not mean that nothing should be done. Opponents of the moratorium portray it as giveaway to Big Tech that bans all kinds of laws—but that isn’t true—and the new compromise legislative language makes it even more clear that there is still a lot of activity states can still legislate. But it does emphasize technologically neutral state legislation.
On the federal level, Congress is already signaling that it can take effective action. For example, Congress recently passed the Take It Down Act to regulate harmful and nonconsensual AI-generated deepfakes, showing that they can effectively act
A targeted approach is best, but the reality is that most policymaking in Washington, D.C. gets done in big chunks. For that reason, Congress will likely consider a larger regulatory package.
When federal lawmakers inevitably approach a comprehensive AI policy, they should look to states in the Mountain West for inspiration and lessons. Utah, for example, did not mandate endless paperwork and token transparency efforts—those should be avoided in federal policy— but instead instituted a state AI office to study the new tech and make clear that liability for harms caused lies with human actors, not AI. Combined with specific protections for AI industry whistleblowers and targeted penalties for direct AI harms like deepfakes, the beginnings of a federal framework begin to emerge.
Pushing the pause button on a growing patchwork is a good start. Once that is done, Congress should consider a national framework that gives businesses room to deploy and develop AI tools and applications that consumers want to use.
Nate Karren is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, follow us on X @ConsumerPal.