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- [00:00]
Indiana University Announcer
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- [00:29]
Podcast Host
Bloomberg Audio Studios Podcasts Radio News President Trump.
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Interviewer
Signed an executive order aimed at limiting state level regulation of AI. The move is supported by tech leaders who have argued local rules could stifle innovation. We're joined by David Sachs, the White House AI and crypto czar or senior advisor. David, I think is a really good place to start in your work with the President in consulting and advising on the formula violation of this executive order. What was the problem that you were trying to solve for and what is it that you said to the President about why this EO was the right approach to focus on state level laws?
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David Sachs
Well, thanks for having me. The problem that we see is that you've got a thousand different bills going through state legislatures right now to regulate AI, and over 100 measures have already passed. Some of these bills are contradictory and you've got 50 different states running in 50 different directions. That type of compliance regime is going to be very hard for small companies and startups, especially innovators, to comply with. And so what we need is a single federal or national framework for AI regulation. And that's what the President supported. And by the way, he supported this for a long time. If you go back to his July speech on AI, he called for a single national framework then, and what we've done with this EO now is to make clear that that is the administration's policy and to task members of the administration to work with Congress to try and en that framework through legislation, because ultimately this needs to be a law and in the meantime create tools that the administration can use to push back on examples of the most onerous and excessive state regulations.
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Interviewer
David, there is of course some pushback on the executive order from the states themselves, from other Republicans. You know, as you know, like I studied the July speech and strategy closely. A big part of it was infrastructure related and about deregulation. The concern about this latest executive order is that while it addresses your concerns about many different pieces of state regulation, it does not provide for a single federal framework.
- [02:49]
David Sachs
Well, at the end of the day, that single federal framework has to be enacted through law and we need Congress to do that. And so the President has asked Congress to do that and he's tasked with members of the administration to work with Congress to produce that framework. In the meantime, what we've done here is articulate a set of principles. We said what values are important to us. We said that we want to protect child safety. That's important. We want to respect copyright. We want to preserve the ability of local communities to choose what infrastructure is in their communities. We're not seeking to preempt the states in any of those areas. So this is an important set of principles that we have put forth. And at the same time, the EO provides for a number of tools that can be used to push back on excessive state regulation and just add. Let me just illustrate why I think this is so necessary. Let's just because we're really talking about here is regulation of AI models and algorithms. Well, think about how an AI model is developed. You can have developers in one state or multiple states writing the code. It can then be trained in a data center in another state. You then can have inference happen in another state, and the entire service is provided over the Internet using national telecommunications infrastructure. So you're dealing there with at least four different states, and all of them can lay claim to regulating those AI models. And those regulations can be in contradiction with each other. Even Democrat governors have admitted this is a problem. So just the other day, Kathy Hochul, the governor of New York, basically said that she might prefer to enact California's SB53, which is a regulation that they just passed in California, rather than the bill that her own assembly gave her, the Raise act, because she sees that, wait, do we really want to create this, Patrick? Or different regulation regulations? So even Democrat governors are realizing this is a problem. And if they all run in different directions, then we're going to end up with a patchwork or a mishmash of regulations that are impossible for companies to comply with. What the president is calling for here is just common sense. We want to get to a single national framework of compliance as opposed to 50 states running in different directions.
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Podcast Host
Meanwhile, Kathy Hochul actually is getting a bit of criticism, perhaps for narrowing and what some are saying is bowing down to business. David, I'm really interested in how you oppose that view because there is anxiety in the population, AI versus jobs, AI versus energy bills. How are you giving them the sense that we haven't seen federal government, and indeed now state governments just handing over the reins to big tech billionaires, as people call them.
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David Sachs
Right. No, I understand. There's a lot of fear out there about AI and job loss specifically, and a Lot of those fears have been, have been drummed up, let me just say, on the job loss question, because I think this is really important, that Yale just released a study and it showed that in the 33 months after the launch of Chat GPT, there was no discernible disruption to the US job market. None, they said. No discernible disruption. And in fact, if you look right now, more jobs are being created than being lost. So this whole idea of job losses just isn't true. There was an article in the Wall Street Journal just last week talking about the construction boom that's happening that's benefiting construction workers, like electricians, like plumbers, like workers who pour concrete or hang drywall. Their wages are up 30 because of this infrastructure boom that's happening right now. And there's actually a job shortage in many of those trades, meaning we need more workers going into those trades. So what we're seeing right now is an overall boom that's benefiting the economy. You know, the, the, the GDP growth rate was tracking about 4%, and half of that, up to half of it's been attributed to AI. So I just think that this, this narrative about job loss has been blown out of proportion. Certainly there could be job displacement in the future, but we haven't seen any of that so far. It's been quite the opposite. It's been job gains.
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Interviewer
David, final one on the eo, if I may. You know what this EO allows for? Is it the sort of hope that, that it will lead to the DOJ suing states like New York and California? And if that's the case, you know, the President and the administration's confidence that you'd win them.
- [06:57]
David Sachs
Well, that is one of the tools that is in the eo is that the DOJ has been tasked to form a litigation task force that would have the ability to push back on excessively burdensome state laws, laws that may be unconstitutional, violate the First Amendment, things like that. By the way, the DOJ already had that power. So this is not a novel power, but what's being done here in the CEO is we're marshaling all of the resources of the federal government behind the strategy of the President to create a national framework. Now in terms of what laws we go after, that's the decision that has been made. You know, we haven't decided whether California and New York should be targets in that way. The one that I think is probably the most excessive is this Colorado law that seeks to prohibit algorithmic discrimination.
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Podcast Host
Right.
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David Sachs
What that basically says is if an AI model has a disparate impact on a protected group, then that model is violating the law. Model developers, by the way, have no idea how to comply with this because they're not aware of all the downstream uses of their model. I mean, if a business decides to use an AI model in a hiring decision, for example, right. That business is already on the hook for discrimination. So how would the model developer know that it was being used in that way? But what Colorado is trying to do there is get their ideology inserted into the model. That's very concerning to us. We think there's a First Amendment issue there, but look, we haven't made any decisions in terms of how that litigation task force be used.
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Podcast Host
David, briefly, all of this is set in the context of US versus China and are deemed to run forward on AI development. Meanwhile, it's been a busy week and 200-undreds might indeed be able to get to China. How many do you think you'll do in volumes? And what do you think the appetite is of China to buy in videos more sophisticated chips?
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David Sachs
Well, it's interesting. I just saw an article that said that China was rejecting the H200. So apparently they don't want them. And I think the reason for that is they want semiconductor independence. The same way that the United States wanted to be energy independent, they want to be semiconductor independent. So they're rejecting our chips. And that's part of the calculation that goes into the decision of what we authorize to be sold to China. The US Policy has always been that we don't allow the leading edge chips and we're not. This is this H200 chip. It was state of the art a couple of years ago, but now it's been superseded by the newer Blackwell architecture and the Rubin architecture that's coming out next year. So this is now a lagging chip, not a leading chip. But what you see is China is not taking them because they want to prop up and subsidize Huawei. They want to create a national champion. And that was part of our calculation of selling not the best but lagging chips to China as you can take market share away from Huawei. But I think the Chinese government's figured that out and that's why they're not allowing them.
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Podcast Host
David Sachs we always wish we had more time. White House AI and crypto czar. We thank you for joining us today on the executive order.
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Indiana University Announcer
Old Playbooks won't solve tomorrow's problems. Indiana University is redefining the relationship between higher education and industry. We're addressing future talent and workforce needs through more than 10,000 industry partnerships supporting and investing in young entrepreneurs and businesses that create jobs and grow the economy, and facilitating the research and development that lead to breakthrough solutions. This isn't business as usual. Indiana University Plus Industry is a partnership that fuels economic growth. Explore IU's impact at IU. Edu impact get ahead with one dose.
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David Sachs
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