The tech agenda to watch from Lutnick and co.

Summary

POLITICO Tech Podcast Summary: "The Tech Agenda to Watch from Lutnick and Co."

Release Date: February 19, 2025
Host: Stephen Overle
Guest: Satya Thalem, Senior Advisor at Americans for Responsible Innovation and Senior Fellow at the Foundation for American Innovation

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1. Introduction

In this episode of POLITICO Tech, host Stephen Overle delves into the newly confirmed appointment of Howard Lutnick as the U.S. Secretary of Commerce. With Lutnick's background as a former Wall Street CEO, the discussion centers on how his leadership will shape the Trump administration's aggressive tech and trade policies, particularly concerning China and emerging technologies like artificial intelligence (AI).

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2. Howard Lutnick's Confirmation and Role

Host (B):
"Last night the Senate voted to confirm Howard Lutnick as the next Commerce Secretary... The number of voices shaping Trump's second term tech agenda continues to grow and the jockeying for influence is well underway." ([00:31])

Satya Thalem highlights Lutnick's pivotal role in advancing Trump's trade restrictions and overseeing tech standards through the National Institute for Standards and Technology (NIST).

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3. Lutnick’s Approach to Tech Policy

a. Trade Authority and China

Satya Thalem (A):
"He made clear that the use of the US's and the executive's prerogatives on trade authority, especially vis a vis China... he's going to embrace that and be an aggressive enforcer and negotiator." ([02:16])

Lutnick is expected to aggressively restrict China’s access to dual-use technologies, continuing the Trump administration's tough stance initiated during the first term with companies like Huawei and ZTE.

b. Leadership in Global Standards

A:
"He was a very full-throated supporter of the US being the global leader in developing standards around technologies... he wants the U.S.... to be that leader in that development of global standards." ([02:16])

Under Lutnick, the Commerce Department is poised to spearhead the creation of international technical standards, ensuring the U.S. maintains its competitive edge in technology development.

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4. Export Controls and Their Impact on U.S. Tech

a. Existing Export Controls

A:
"Restricting access to, say, the Chinese market... may be a hindrance to US Development... national security costs... they're essential." ([04:19])

Lutnick is anticipated to uphold and potentially tighten export controls on semiconductors and other sensitive technologies, balancing national security interests against economic implications.

b. Impact on Innovation and AI

A:
"We realize... that restricting access to the Chinese market... may be a hindrance to US Development... the national security costs are often not priced, but they're there." ([04:19])

While export controls might pose challenges for U.S. tech companies in terms of market access, the overarching consensus emphasizes national security benefits that outweigh these economic drawbacks.

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5. Industry Consensus and Silicon Valley Alignment

A:
"Silicon Valley is now increasingly part of Washington... there are costs borne by a passive approach to free trade... export controls are essential." ([06:22])

Satya observes a significant alignment between Silicon Valley and Washington, recognizing the necessity of export controls despite potential impacts on innovation. This shift indicates a broader understanding within the tech industry of the importance of national security considerations.

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6. AI Policy Under the Trump Administration

a. Continuation from Previous Policies

A:
"The direction to NIST to develop voluntary global best practices and standards... is explicit in the Trump administration." ([09:07])

The Trump administration builds upon initiatives from both the Biden administration and the first Trump term, emphasizing the development of AI standards and practices through NIST.

b. Safety vs. Innovation Debate

A:
"Sometimes it gets lumped together. It's just very reductive to say safety versus innovation." ([10:56])

Thalem argues against the simplistic dichotomy of safety versus innovation, advocating for a balanced approach where safety measures facilitate rather than hinder technological advancement.

c. Rebranding AI Safety Initiatives

A:
"The term [AI safety] has been kind of dirtied... they could rebrand the equivalent of the Safety Institute, give it a different emphasis." ([11:19])

Despite potential political rebranding, the core objectives of AI safety—ensuring responsible and secure AI development—are expected to persist under the Trump administration.

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7. Power Centers and Key Figures in Trump 2.0 Tech Policy

A:
"Every new administration is like a house with a bunch of doors all on the first floor and everybody's running in... their actual remit and job that gets discovered over time." ([13:59])

Thalem describes the Trump administration’s tech policy landscape as dynamic and somewhat chaotic, with both returning figures like Michael Kratzios and new players such as David Sacks and Elon Musk vying for influence.

Notable Figures:

• Michael Kratzios: Overseeing the Office of Science and Technology Policy.
• David Sacks: AI and crypto czar, focusing on issues like stablecoin legislation.
• Elon Musk: Active in various tech and policy initiatives.

A:
"The advancement of technology is highly unpredictable... the US has to win. That's the direction from the top." ([16:27])

Despite the internal dynamics, there is a unified directive emphasizing technological supremacy of the United States.

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8. Government Tech Modernization and Potential Setbacks

a. Cuts to Key Agencies

Host (B):
"There have been reports about cuts to the US Digital Service and the Technology Transformation Services." ([18:38])

The Trump administration has implemented workforce and program cuts affecting agencies responsible for modernizing government technology infrastructure.

b. Challenges in Modernizing Government Tech

A:
"Export controls are essential... the advancement of technology is highly unpredictable." ([19:12])

Despite efforts like the Technology Modernization Fund, Satya expresses concerns about the administration's approach to tech modernization, highlighting bureaucratic inefficiencies and resistance from agency IT personnel.

A:
"We are constantly trying to balance bureaucratic accountability with the need for flexibility and efficiency." ([21:30])

He underscores the difficulty in reforming government tech practices without compromising accountability, drawing parallels between private sector agility and public sector constraints.

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9. Conclusion

Host (B):
"That's all for today's Politico Tech..." ([22:01])

The episode concludes with host Stephen Overle summarizing the insights shared by Satya Thalem, emphasizing the complexities and anticipated directions of the Trump administration's tech policies under Howard Lutnick's leadership.

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Notable Quotes

• Satya Thalem:
  "We need to stop giving China our technology." ([02:16])

• Satya Thalem:
  "Developing global technical standards... this is a good thing." ([06:23])

• Satya Thalem:
  "Safety as a term may be dead, but the concepts behind it will endure." ([11:19])

• Satya Thalem:
  "The US has to win. That's the direction from the top." ([16:27])

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This episode offers a comprehensive analysis of the Trump administration's evolving tech agenda, Howard Lutnick's influential role, and the interplay between national security and technological innovation. Satya Thalem provides expert insights into the strategic directions and challenges facing U.S. tech policy, making it essential listening for stakeholders in technology and policy sectors.

Transcript

[A]

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[B]

Hey welcome Back to POLITICO Tech. Today's Wednesday, February 19th. I'm Stephen Overle. Last night the Senate voted to confirm Howard Lutnick as the next Commerce Secretary. The former Wall Street CEO will take point on Trump's aggressive tariff agenda, implement trade restrictions on China, and oversee tech experts at the National Institute for Standards and Technology. With Lutnick officially joining the Cabinet, the number of voices shaping Trump's second term tech agenda continues to grow and the jockeying for influence is well underway. Satya Thalem has seen that play out from the inside. During Trump's first term, Satya was a senior counselor in the Office of Management and Budget and before that he spent five years on the staff of the Senate Homeland Security Committee. Now Satya is a senior advisor at Americans for Responsible Innovation and a senior fellow at the foundation for American innovation, two policy think tanks trying to shape how Trump 2.0 handles AI and other emerging technologies. On the show today, Satya tells me what he expects from Lutnik and other tech players in Trump's orbit. Here's our conversation. Masatia, welcome to POLITICO Tech.

[A]

Thanks for having me.

[B]

Let's start with the next Secretary of Commerce, Howard Lutnick. You led a coalition of tech groups who were backing his nomination. Where are you thinking he will land on tech issues?

[A]

Well, I think there's a little bit of white space here. I don't know that in the past that he's expressed a great deal specifically on AI, but I think we endorsed it for two reasons in particular. One is he's made clear that the use of the US's and the executive's prerogatives on trade authority, especially vis a vis China, our competition with China, restricting access to dual use technologies, that he's not only going to accept that, but he's going to embrace that and be an aggressive enforcer and negotiator with respect to allowing other countries to have access to our most advanced capabilities. That's one. Two. In the hearing, in his confirmation hearing, he was a very full Throated supporter of the US Being the global leader in developing standards around technologies, standards around, especially technical definitions, evaluation. There's an office within Commerce called NIST that some folks are familiar with, not a regulatory office. They are kind of the nexus of all the best nerds in the government and academia and industry. And they get together and they try to come up with consensus, voluntary guidelines. And what he recognized, and he was very explicit about in that hearing, is that if we don't do that, we don't fulfill that role, someone else will. And Letnik was very clear that he wants the U.S. in fact, he thinks it's essential that the U.S. be that leader in that development of global standards.

[B]

Well, I want to talk about each of those parts a little bit more. You know, Letnic is going to inherit a slew of export controls on semiconductors and other sensitive technologies. And there is tension right now in industry over whether the Trump administration is going to further tighten those restrictions and whether that will hamper innovation and development of AI. I mean, do you think that's the case? Do you think tighter export controls will mean tougher time for US Tech companies?

[A]

Well, two things can be true simultaneously. But if you're asking me to predict what Glutnik will do, this was also something that he very clearly referenced in his confirmation hearing. He said, in so many words, he said, we need to stop giving China our technology. I think we're kind of in a new consensus in Washington. There was a time in the 90s, early 2000s, which basically seems like just like a Jurassic period ago, that free trade uber all. We thought that other countries would come to play by the. The. The norms of international trade. We're not in that world anymore. You know, significant use of export controls actually started in the first Trump administration with respect to Huawei and zte. Now, these weren't necessarily AI technologies, but these are advanced communication technologies, cameras. We've spent billions of dol de risking our critical infrastructure because a lot of this equipment was just kind of fully metabolized through everything, especially at airports, it turns out, and a lot of our military industrial base. It was continued in the Biden administration. I don't see any reason to think that the Trump, too, will take some sort of orthogonal approach. I think they will be more strategic than the Biden administration instead of doing kind of this dance with Nvidia where they take like one step forward and then a half step back with respect to the scope of export controls. But I don't think the voices in industry, even if they're Right. That restricting access to, say, the Chinese market, which is, of course massive, may be a hindrance to US Development. I think we realize as a policy apparatus in a bipartisan basis that those immediate gains in terms of access to a market are overwhelmed by things like national security costs that are often not priced, that are not reflected, that are not explicit, but they're there and we pay for them one way or another.

[B]

Right.

[A]

So I think that's where we're at. And I know that Lutnick. I'm very, very confident Lutnick is going to not tap the brakes on our use of export controls.

[B]

A quick follow up on that. You know, one thought that is often recurring to me is whether or not for the US to beat China in emerging tech will American companies just have to take a few hits, including on things like export controls. And I hear you saying there's more consensus in Washington about this. I guess I wonder if there is consensus with Silicon Valley and tech companies about this too, in your view.

[A]

Yeah, I think. And that's fair. Well, you know, Silicon Valley is now increasingly part of Washington.

[B]

Yeah.

[A]

So I don't know that there's as much separation as there had been or where there was kind of a sort of a condescending dismissal of Washington by Silicon Valley and say, they're going to do what they're going to do, we're going to do what we're going to do. Whenever the twain shall meet, the folks that I talk to, the folks in industry, acknowledge that we are not in a world where quickly accelerating into every global market will ultimately benefit all of us. So again, I think as a policymaker, and this is the messaging that I hope that people start to adopt, is there are costs borne by that sort of passive approach to free trade. There are national security costs, there are IP costs, there are corporate espionage costs, and those are born somewhere by somebody in the economy, but they need to be reflected in our policies right now. So when I worked in the White House, a lot of what we did is figure out the costs and benefits around proposed regulations, including export rules. Export controls are done through a rulemaking process. All we're doing is bringing forward that national security cost, that global economic competitiveness cost, and bringing it forward and saying, let's reflect it now and then make the choice based on that. And I think under almost any accounting, many of these export controls, some of these restrictions on trade are essential because if you actually fully account for those costs, you'll see that this is actually the best benefit cost calculation you can.

[B]

Make, you know, under the Biden administration, the Commerce Department was sort of also this driving force behind a lot of AI safety initiatives, including with the U.S. aI Safety Institute. We heard Vice President J.D. vance say in Paris last week that AI safety isn't the priority now for this administration. Where do you think that puts the epicenter of AI policy under Trump this time around?

[A]

I think we're still trying to figure that out. You know, the Trump administration issued requests for information on AI policy about steps they could take. So it's an indicator that they're still figuring that out. I know that there are a number of folks that have returned to the Trump administration that were in the previous were in Trump 1. You know, if we could extrapolate from there, I think actually an underreported story is that there's a fair amount that was done under the Biden administration that had an antecedent in the first Trump administration. The direction to nist, not under the name AI Safety Institute, but the direction to NIST to develop voluntary global best practices and standards that's explicit in the Trump administration and some of the guidances to agencies that we worked on. We issued guidance to agencies to both consider regulatory and non regulatory approaches to governing AI, but also explicitly noted that confidence and safety lead to adoption and innovation and investment by the broader economy. That's referenced in OMB guidance that I helped authorize. I get a little annoyed by trying to say how to put this? Safety, as far as I know, isn't a single thing right, but it's lumped in together under an approach that I think is viewed as decelerationist or risk aversion. And again, developing global technical standards. We've done it for 100 years under NIST and various precursors. This is a good thing. I think sometimes it gets lumped together. It's just very reductive to say safety versus innovation. I do think the approach will be, will be different, but again, a lot of that work started in 2019. 2020.

[B]

Right. It's, you know, we had Dr. Alondra Nelson on the podcast recently and she kind of, she was a Biden administration official and expressed some similar sentiments, which makes me sort of think, you know, is AI safety as a term maybe tainted and dead, but some of the concepts behind it will actually endure and kind of transcend maybe the politics of it.

[A]

Yeah, I think the term has been kind of dirtied. And in typical Trumpian fashion, they could rebrand the equivalent of the Safety Institute, give it a different emphasis. There were a number of Bills in the last Congress, some of which are being reintroduced to authorize, to permanently authorize AI Safety Institute. But some of them also changed the name and gave it a different focus. But ultimately, as I interpreted, those bills gave them kind of the same task. You know, also like you recently saw the announcement with Scale AI to provide their technology as an evaluation benchmark test bed with the AI safety suit. This is an explicit agreement. You also had OpenAI and Anthropic entering voluntary agreements with the AI Safety Institute to evaluate their safety testing and their red teaming.

[B]

Right.

[A]

The really cynical argument could say, well, they were only doing that because they were anticipating regulation and they want to be on the good side of the future. I just don't see that argument. If they didn't want to, if they didn't see it as in their interest, I don't think that they would, that they would do it. Also notwithstanding that, NIST has not been a regulatory agency for like 100 years. So I don't buy the celebrity slope argument, but kind of a long winded answer to agree with you that safety as a term may be dead. I do think that the Trump administration wants to have a muscular AI policy, but it's still being worked out.

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[B]

Well, you mentioned how there are some folks who are returning to the second Trump administration from the first time around. Obviously that includes Michael Kratzios, who is going to be running the Office of Science and Technology Policy. You also have a bunch of new folks, though. You have folks like David Sachs, who's in this new role of AI and crypto czar. You know, Elon Musk, who seems to be everywhere and involved in everything so far in this administration. You know, we're obsessed in here with kind of the power centers of government. When you look at this lineup, you know, who holds the keys, do you think?

[A]

I think of every new administration as like a house with a bunch of doors all on the first floor and everybody's running in. So who's got the keys? Actually kind of everybody. And everybody's sort of like running into the vacation house on the first day vacation. Everyone's calling their room. I got the upstairs bedroom, I got this downstairs one. I don't want the bunk bedroom. So they're all kind of figuring out what their turf is, you know, working in the White House. There are some titles that are repetitive and come to be expected, but their actual remit and their job that gets discovered over time, over like, well, who does what? Who's the person you call on that. What is my authority to act here? That's not really well defined. You know, David Sacks, for instance in the past has expressed concerns about existential AGI risk. You know, the kind of like low probability high impact tail event and whether we should be concerned about. Similar to Elon Musk who's actually been like very, very vocal about being concerned about AI taking or replacing humans. Not really so much my concern. And I don't see that risk reflected, you know, much in their speechifying and their public statements. Seems like Sack Sachs has been more focused on crypto and has been more granular. Especially has made some recommendations to Congress about wanting a stablecoin bill and so on. You know, I worked with Michael Kratios and Lynn Parker in the, the previous administration. These are very thoughtful people. They're very smart. They really drove the first executive order on AI and worked with us on again like these guidances and some of these things that, that stemmed out of it. You definitely have, you know, the Marc Andreessens and kind of the VC Silicon Valley folks who are definitely more accelerationist and a little more, not a little more, much more dismissive of folks who rally behind the safety flag again. I think the folks that I know are going to be listened to in spite of the new people because they have the experience and they become, because they've passed the test of being brought back in and viewed as sufficiently loyal that they can pass that, that political barrier. These are serious people that are not subject to tweet length policymaking and they realize this is super complicated. Semiconductor supply chains are super freaking complicated.

[B]

Right.

[A]

The advancement of technology is highly unpredictable. And I think they will rally around one idea which is the US has to win. That's the direction from the top.

[B]

As someone who served in the first administration, what's surprising you about how things are going so far? Granted, we're still less than a month into it.

[A]

I mean a lot of this was was forecasted by the campaign itself, by the President, by those that were very close to him in terms of pulling down the Biden EO on day one or week one, I was a little surprised that they didn't replace it substantively right out of the gate. Right. This was something I heard that folks in transition and some of the kind of think tank folks around town were helping develop the replacement for the Biden executive order on American leadership and artificial intelligence. And I was a little surprised that we haven't seen it. So if I had to dig deeper on that, I think that maybe there were the folks, again, some of the serious folks who said the thing that you guys had put together is not sufficient and maybe we need to take a little more time and be a little more thoughtful on what we replace it with. So I guess I've been a little surprised by that.

[B]

I'm a little surprised that you didn't say Department of Government Efficiency or doge. That seems to be what's surprising people most at the gate.

[A]

You know, the Clinton Gore administration was like very explicitly had like this reinventing government commission and the vice president was in charge of it. Yeah, I guess these kinds of aggressive reforms actions are surprising generally. But again, a lot of this fully kind of forecast by the campaign, the degree to which is happening is surprising. I'm less surprised at the direction of it. You know, like a vector is both like magnitude and a direction. So like directionally I'm not surprised. Magnitude maybe do.

[B]

I'm curious what you see, if any. Well, I'm curious what you see as the impact, if any, of DOGE and some of the cuts that it's making to the workforce and to programs on kind of the tech readiness and tech modernization of government. In particular, there have been reports about cuts to the US Digital Service and the Technology Transformation Services, which are two offices that are supposed to help the government modernize its technology. Do you worry about a setback there?

[A]

I do worry about a setback. At the same time, I worked at a committee that authorized things like the Technology Modernization Fund and TTTS and oversaw GSA. There was a lot of good faith put into establishing these programs and this funding. I think what we found that at the margin, they led to some improvements and some modernization of IT and back office systems. But in spite of an incredible amount of leeway that we provided in these programs, they still at best made marginal changes. And in some cases I've heard from agency IT folks and some of this has been publicly reported where they've told gsa, they've told tts, just stay the hell away from us. We don't, we don't, we don't have confidence that you actually are able to do what you say you're going to do. And we've heard horror stories from our colleagues that things went slow. This is the paradox of policy of, well, not just policy making of like of running the government. We as a public are very uncomfortable with the idea of bureaucrats. And I say that in non pejorative way. Just the kind of functionaries who make government work having too much unlimited freedom to make choices. We want them to be accountable to either the executive or Congress. So we constantly want to layer on restrictions to make sure that waste, fraud and abuse and feather bedding and self dealing doesn't happen. But then at the same time we get super upset and saying, why can't you just do the simple thing that in the private sector this would have been one decision and then it's done and we're moving on. I don't know the solution to that this administration is taking. The solution that we're just going to like, like the piggy bank. We're just going to throw it on the ground and like reassemble it. I don't know if they're wrong. You have to provide some credit to Musk that like he's built successful companies before. There's, there's some evidence that, okay, this is an approach that work. I think they have to recognize that, you know, a ride sharing service where you move fast and break things is different than the faa.

[B]

Right.

[A]

Or the, the Nuclear Regulatory Commission or whatever the equivalent is. Right. And so this is really tough because in a democracy we don't want to give bureaucrats too much endless leeway, but we also want to give them enough freedom to just do the thing that they are actually trying to do themselves.

[B]

Listen, Satya, appreciate you being here on Politico Tech.

[A]

Yeah, happy to be here.

[B]

That's all for today's Politico Tech. If you enjoy Politico Tech, please subscribe. And for more tech news, subscribe to our newsletters, Digital Future Daily and Morning Tech. Our managing producer is Annie Reiss. I'm Stephen Overle. See you back here tomorrow.