Shriram Krishnan (2:00)

Almost, almost.

Becky Quick (2:01)

You'll see right now that the Dow futures are higher. This comes after the Dow set a record level yesterday at the close. Should point out that The S&P 500 also hit a new high in yesterday's session. The Nasdaq was down slightly yesterday because of that drop in AI related stocks. Yesterday it was led by Oracle. Today it's a different story. A new stock that's dragging those stocks down. We'll talk more about that in just a moment. And Mike, some of the interesting things here, just the talk of the change in leadership potentially, I mean, a week doesn't make a Trend. But the Russell 2000, which we didn't have stacked here, set another record yesterday. It's up by about 2 and 3/4% for the week.

Mike Santoli (2:37)

Today it's we're gone from the AI trade to the GDP trade. So basically real economy, things that have torque to a reaccelerating economy have been working pretty. I mean the Dow is beating the NASDAQ on a quarter to date basis. So that's a lot longer than a week yesterday. And it's been banks, it's been transports. So there has been something behind this. The market has been eager to to price in a quicker pace of growth into next year. We have some policy tailwinds kicking in. The question is whether that again is more just kind of like picking up some of the laggards, letting the big tech trade rest for a little while. Because you remember last year at this time story was exactly the same.

Becky Quick (3:14)

I know. I feel like this is a story we've been talking about.

Mike Santoli (3:17)

Happens a lot.

Becky Quick (3:17)

A long time for waiting for this, waiting for Godot, for the technology sector to no longer be the leaders.

Mike Santoli (3:22)

That's right. And you know, it's sort of a be careful what you wish for because if the 35% of the S&P 500, I.e. the Mag 7 really starts to underper form, it's hard for the overall market to kind of stay in gear. But so far I think it's been pretty constructive. The S and P made a new high, but only by a few points. So we're basically flat from October 29 on the S and P. And I think you have banks up 11%, you have transports up 7% and max 7 is down a couple of percent. So it's proven that the market can, can do this when conditions are right, as we got that relatively dovish takeaway from the Fed. All right, well, this is what's weighing on the NASDAQ this morning. Broadcom earnings and revenue beat estimates and the company's current quarter forecast came in above expectations. The stock initially rose after the report, but fell during the call. That was after the CFO said margins will fall by about 100 basis points due to a higher mix of air revenue. Also of note, Broadcom said it has acquired a fifth customer for its custom chips and it revealed that Anthropic was the previously unnamed customer that had placed a $10 billion order. I think there was some handicapping that that might be exactly who that customer was.

Becky Quick (4:27)

This was just so interesting, Andrew, to the idea that they came in with strong numbers. It's just expectations are so high at this point and I think that's the biggest part of the issue with this. It's hard to impress the Street. There's been so much Good news that's been baked in. Broadcom shares, I think before this were even more expensive than Nvidia.

Mike Santoli (4:47)

Well, more expensive, yeah.

Becky Quick (4:50)

So it's just hard to beat super high expectations.

Andrew Ross Sorkin (4:56)

And that's, that's been the. But that's been the story the whole time. And we're going to be living through this for some period of time and we'll see. I don't know where what you think of what happened Oracle shares yesterday, Mike, but you saw it happen again.

Mike Santoli (5:07)

Yeah, it's fascinating. So it's been kind of the theme has been Broadcom Alphabet outperforming the companies to open AI, which is in fact Oracle. So we are still watching those shares this morning. They look like they're going to be down another 1% or so. That was after yesterday's decline of nearly 11%. Stock fell after revenue and earnings missed analyst estimates and raised questions about its aggressive spending plans. So it did weigh on other related companies, including in Video Micron, Core. We saw the whole Food Chain is in this little bit of a mini panic about exactly how we're going to capitalize the build out of this boom. And as a result of the decline in Oracle, Executive Chairman Larry Ellison's net worth fell by about $25 billion on paper. But of course, despite the slide, Ellison's Oracle stake is still worth more than $200 billion. That is according to Bloomberg.

Andrew Ross Sorkin (6:00)

And by the way, I mean, this is a separate, separate issue, you know, Warner Brothers Discovery. The Warner Brothers Discovery deal. I think one of the reasons that we've heard at least around the hoop on the Warner Brothers side is why they went ultimately with the Netflix deal was they were actually somewhat concerned, not that Oracle was going to disappear because it's not going to disappear, but just that you're the Ellison family's wealth and whatever is going to be used to pay for this deal is ultimately probably going to come in large part from Oracle. So, yeah, their own views about bubbles and things.

Becky Quick (6:35)

The Ellisons have made the point that the money's in the trust.

Mike Santoli (6:37)

Yes, but. Right, so the shares are in the trust.

Becky Quick (6:39)

Shares are just to be able to, to be able to cash in to pay for some of this stuff. But, you know, we all have kind of felt a little bit the wealth effect when it takes you down, how much are you willing to spend?

Mike Santoli (6:50)

It's also, as you know, Andrew, about what WBD can plausibly say to persuade its shareholders and justify the Netflix deal. I mean, obviously there is a concern. I mean, Ellison's net worth in Like a couple of months went down from almost 400 billion to, you know, where it is right now. So it's obviously shows you that it's not money in the bank, so to speak.

Andrew Ross Sorkin (7:11)

Right. Meanwhile, let's get you up to date on what's going on in Washington because we got an update on efforts in Congress to try to tackle a looming rise in insurance costs. We've been talking a lot about this on the broadcast. The Democratic plan now to extend expiring health subsidies winning some Republican votes but failed to advance in the Senate. Now a Republican proposal also failed. It would not have extended the subsidies though, but would have offered federal funds to some households to help cover out of pocket health expenses. Now Senate leader Thune and Schumer playing the blame game after the votes failed. Take a look.

Amy Javers (7:47)

Apparently they think that a three year.

Senator Dave McCormick (7:51)

Extension with no reforms to try and disguise the real impact of Obamacare's spiraling costs is actually a plan.

Amy Javers (8:03)

I don't know how you can call it a plan.

Mike Santoli (8:06)

Senate Republicans just shoved the American people off the side of a cliff with.

Senator Dave McCormick (8:11)

No parachute and with an anchor tied to their feet.

Andrew Ross Sorkin (8:16)

Now open enrollment generally closes on Monday for plans to start January 1st. That means that many American households are signing up literally right now for coverage with much higher costs and no relief from Congress in sight.

Becky Quick (8:30)

This is crazy. I mean, this is politics at play. Nobody put up any bill that was expected to pass on this. Nobody tried working to bring together any sort of bipartisan issues on this. You know, I don't know how you can do it without extending it for some period of time. I think the Democrats bill to extend it for three years was lunacy that wasn't going anywhere. You could have extended for one or two years and you probably could have gotten some bipartisan support, particularly if you would have put in some sort of potential for change or reform. I think it's impossible to do that either way. You know, the Republicans bill didn't take into account anything that was going to give any sort of extension to that. And both sides knew that. Both sides walked into this knowing that neither bill would pass with the 60 it needed.

Andrew Ross Sorkin (9:15)

Well, this is going to, this is, I'm sad to say, I think this is going to drag on for some time. And this next story I think may drag on for some time as well. We'll see what ultimately happens. President Trump separately is a totally other issue now signing an executive order on artificial intelligence looking to curtail states ability to enact piecemeal regulations. Amy Javers is in Washington this morning with more. It's a big story for us.

Amy Javers (9:40)

Yeah, good morning, Andrew. President Trump signed the executive order last night. It's going to attempt to preempt state level efforts to pass laws of their own regarding AI. Now, the move represents a big win for tech and AI companies that worried about facing a patchwork of possibly contradictory regulations across the country. The president's executive order will create an AI task force that's going to challenge and try to strike down any state laws in court, arguing at least in part that they are in an unconstitutional attempt by the states to regulate interstate commerce. Now, the Trump administration will also threaten to withhold certain federal funding for states that pass their own AI laws. The president says that's going to make it easier for AI companies.

Unknown Guest (possibly a business expert) (10:25)

They had to get 50 different approvals from 50 different states. You could forget it because it's not possible to do, especially if you have some hostile. All you need is one hostile actor and you wouldn't be able to do it. So it doesn't make sense. I didn't have to be briefed on this, by the way. This is real easy business.

Amy Javers (10:42)

Now, the move puts the president on the side of the large tech companies and against some of the most visible figures in his own MAGA political movement. Former Trump adviser Steve Bannon, Congresswoman Marjorie Taylor Greene and Florida Governor Ron DeSantis have all opposed the idea, saying it's a gift to big tech that ties the hands of states that want to protect their own citizens. And the Wall Street Journal reported this week that President Trump solidified his position against state level regulation after an Oval Office meeting in November with Nvidia CEO Jensen Huang, who argued for this national standard. Now, a law passed by Congress, remember, that could supersede state level bills. But supporters of the state ban tried and failed to get that idea passed on Capitol Hill earlier this year. So that left this less powerful executive order as their best option. And the president took it last night. Guys, back over to you.

Andrew Ross Sorkin (11:35)

So, Eamonn, here's the question on something like this. Are there example, similar examples of things where executive orders have been used in such a way? Because invariably they're going to be lawsuits that could be brought by consumer groups, could be brought by others. I just don't know where this goes and whether you think it ultimately gets upheld. And if it doesn't get upheld, what then?

Amy Javers (11:58)

Yeah, I think a lot of these challenges are going to end up in the Supreme Court because you're going to see the Trump DOJ challenging, you know, if California has An AI law. Colorado has an AI law. The Trump DOJ will try to challenge those in court on these constitutional grounds. Anything, you know, that's a constitutional dispute ends up in the Supreme Court, especially when the stakes are this high. So we'll see what the court does with it. This is, as I said, this is a fallback position for the people who want this national regulatory standard. Right. The ideal thing for them would be to get Congress to pass it. If Congress passes a national law that supersedes state laws and that's the law of the land. But they don't have the votes in Congress or they didn't this year to do that. So you might see them make another run at it next year. But next year is an election year, and that gets tougher and tougher as we move closer to election Day to really do anything at all, particularly with the slim margins up there. So this executive order might be the company's sort of best hope now, but it's not a perfect tool from their perspective.

Andrew Ross Sorkin (12:58)

And Eamon, finally, what do you think the biggest sticking point is around? Not just, I mean, there's the issue just state law versus federal, like that's a thing. But then there's issues about protecting children that some of the state laws include. The president's suggested he's not going to go after at least those portions of the law. That's what I was trying to understand. Sort of where you see the fault line in all of this, on the merits, on the issues in each state.

Amy Javers (13:23)

Yeah, it's an interesting question. So the president's going to have to make a political determination of what it is that he wants to challenge and which states he wants to challenge. You can imagine that this task force is going to be challenging a lot more state regulation in blue states than it will in red states. So there's going to be a political element overlay to this as well. As people across the country, you know, watch their kids holding these devices and producing all kinds of results, they might say, hey, wait a second, I don't want that in my kids hands. That can become a political issue. And I think you're going to see this task force really tightly controlled by the White House in terms of what the political priorities are.

Andrew Ross Sorkin (14:05)

Okay, Amy Javors, thank you.

Mike Santoli (14:08)

Multiple reports say President Trump is preparing to order his administration to reclassify marijuana as a less dangerous drug. A Washington Post report said Trump held a meeting at the White House on Wednesday with marijuana industry executives, along with HHS Secretary Robert F. Kennedy Jr. And CMS Administrator Dr. Mehmet Oz. They were joined on the phone by Speaker Mike Johnson, who cited studies arguing against the movement. The executives reportedly rebutted Speaker Johnson's arguments and Trump left the conversation prepared to move forward with the reclassification. Reports say nothing is final and President Trump could still change his mind on this. Cannabis is currently labeled a Schedule 1 drug in the same category as heroin and LSD. Reclassifying it as a Schedule 3 would put it at the same level as steroids and Tylenol with codeine. So you see the reflex move in a lot of these cannabis stocks, which really do always, they always trade as just kind of lottery tickets on.

Shriram Krishnan (15:03)

Look at that.

Mike Santoli (15:04)

Look at the price levels.

Becky Quick (15:04)

Right, right.

Mike Santoli (15:06)

In a reverse split to get it to 10.

Becky Quick (15:08)

Look, the only thing I will say is it's coming on the same week as the New York Post and others writing about this Scromming issue where people have smoked marijuana wind up with screaming, vomiting cases in in the hospital. It's not the same stuff it used to be. Maybe these companies are dealing with much more different, more closely monitored versions of that stuff, but you know, there's still some scary stuff happening in the drug trade.

Amy Javers (15:38)

Cheese will be next.

Cameron Costa (15:39)

Still to come on Squawkpod, Obamacare subsidies expire in just a few weeks. We're diving into the health care battle in the Senate with Pennsylvania Senator Dave McCormick.

Senator Dave McCormick (15:50)

We pay three times per person for health care than any other country in.

Cameron Costa (15:54)

The world, plus how he views state and federal AI regulation. We'll be right back.

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Shriram Krishnan (17:29)

This is Squawk Pod up and Andrew Q.

Andrew Ross Sorkin (17:33)

You're watching Squawk Box right here on cnbc. I'm Andrew Osorkin along with Becky Quick and Mike Santoli. This morning, Joe is off. We got a lot going on, though, on this Friday, dueling health care bills.

Becky Quick (17:44)

Failing to pass in the Senate as the Obamacare subsidies expiration date inches closer. And joining us now to talk about this and much more is Republican Senator Dave McCormick from the state of Pennsylvania. And Senator, thank you for being here today.

Senator Dave McCormick (17:56)

Good morning.

Becky Quick (17:57)

I'm actually a little shocked that we are getting this close to the deadline for the subsidies being renewed where most people have to. The deadline for signing up is Monday.

Shriram Krishnan (18:06)

Yeah.

Becky Quick (18:07)

And nothing's been done to this point. It seems like a bit of a cliff to fall off. And I realize full well that you and a lot of other people would like to see some reforms done to this, but we came so close to the end. It seems like it's hard to believe there's not going to be an extension while that reform is taking place.

Senator Dave McCormick (18:25)

Yeah, it's a scary thing. I think for a lot of Pennsylvanians, a lot of Americans, because a lot of working families, their premiums are going to go up pretty dramatically. If you make 50,000 bucks a year, you have a $200 a month premium, it could be $400. And that pressure is going to be a real problem. And you got to start paying by saying, where are we? I mean, we, we've had Obamacare for 15 years. It promised lower cost, improved quality, better access. It's failed on all fronts. And what what this subsidy is, is an extension from COVID subsidies. And these gave subsidies of people that are making five or six hundred thousand bucks a year a lot of understand all of that.

Becky Quick (19:03)

Look, Obamacare did do one thing very well and that's get a lot more Americans insured, people who had been uninsured before. I understand that these are subsidies from COVID era that are extended and going through, but it's also so abrupt and seems like it's yanking the rug out from under 22 to 24 million Americans.

Senator Dave McCormick (19:21)

Well, first I say two things One part of the reason we're in this mess is we had a 42 day shutdown that didn't resolve anything. So we're getting pressed at the end. The Democratic proposal was essentially a three year extension.

Becky Quick (19:33)

I looked at it, both of these bills, it was very clear that neither of these bills would get anywhere near the 60 votes they needed to pass. What I don't understand is why there doesn't seem to be any sort of bipartisan work or talk across the table where you get something that maybe extends it for a year instead of two or three years. Three years was what they were asking for. If you.

Senator Dave McCormick (19:53)

Three years without any, without any reforms.

Becky Quick (19:55)

Right.

Senator Dave McCormick (19:55)

Which was a non starter alternative was putting money in the HSA through the HSAs.

Becky Quick (20:00)

But, but it just seems like neither one of these took into account reality.

Senator Dave McCormick (20:04)

Well, there's, you know, listen, I'm hopeful I agree with you on the crunch of time. You see Senator Shaheen and some others on the Democratic side that appear to be recognizing that the current subsidies in their form cannot be extended without reform. And so I'm hopeful we'll get, we'll get some. For me, I think the Republican proposal was a good proposal. But I also, I'm worried about the working families in Pennsylvania who are really having the pressure on us.

Becky Quick (20:28)

I've been reading some of the town halls that you've been having and what people have been saying to you. You're going to face a lot of pressure.

Senator Dave McCormick (20:33)

Yeah, listen, I do town halls every two weeks. Tele town halls. I get 10,000 people that show up. The questions are totally unscripted. And, and health care, you know, housing, health care, energy prices are the big things. We're making progress on energy prices, we're making progress on housing. But the health care is a real challenge. And listen, here's the reality of it. We pay three times per person for health care than any other country in the world.

Becky Quick (20:59)

World.

Senator Dave McCormick (21:00)

Our health statistics are longevity, our lifespan, infant mortality is terrible relative to other developed countries and still 25 million people don't have access to health care. So Obamacare has been an abysmal failure. We can't go forward without real reform. So there's sort of two agendas. One is near term, how do you deal with working families that, that are going to be crunched. And then longer term we got to do reform that gets cost under control.

Becky Quick (21:28)

Is there afoot? Do you think that there will be something that comes through or do you think this is it? What do you tell your constituents?

Senator Dave McCormick (21:38)

I think there'll Be something. I hope you do. I'm certainly going to be advocating. We've got to do something to help working families. The current subsidies cannot be extended in their current form. We got to do something.

Becky Quick (21:50)

I hear your point about not wanting it to go to families that are making half a million or more, that this should be really helping out the people who need it. Yes.

Senator Dave McCormick (21:58)

Listen, this is whatever we do and I really hope we do something, it's going to be a bridge to a much broader conversation about health care reform. And even if you're a Republican like I am and think Obamacare was catastrophic and a real failure of the Democratic Party, we now have to deal with that problem together as Republicans and Democrats.

Mike Santoli (22:18)

What specifically falls under the heading of reform form that you actually think is practically speaking something that could be implemented?

Senator Dave McCormick (22:26)

Do you mean in the near term? Yeah, yeah. When in the near term, I think you got to bring down the income caps very significantly. I think you can't have an automatic extension on an individual basis without rooting out the fraud, probably some minimum payment.

Becky Quick (22:41)

So somebody's got to have skin in the game.

Senator Dave McCormick (22:43)

5, 10, $15, tiny amount that the key for that is a guards against fraud and then you can't have a three year extension. So it's got to be a less extension. It's got a cap incomes and it's got to deal with. And I love the idea that the president put forward and Cassidy Crapo put forward, which is ideally you want to have consumers have choice with some sort of health savings account that's going to help fund part of this. So, so that those are the parameters.

Mike Santoli (23:11)

That might just illuminate how much of people's health care though is actually covered by somebody else. I mean, in other words, the overall cost can't come out of people's pockets directly even if you give them a check. Right. I mean the whole thing of risk.

Senator Dave McCormick (23:22)

Pooling is coming out of their pockets in two ways. It's coming out of premium is coming out of. Of. Of what, what payment they have to make up front as part of the right first down. So the health savings account to mitigate that payment, where for Most people it's $6000 before the insurance kicks in, that 1500 dollars in their pockets is going to take a lot of pressure. And remember what we're talking about here is, you know, in Pennsylvania at least median income outside the Philadelphia counties is $52,000 a year. So if somebody has to pay 6,000 bucks.

Mike Santoli (23:54)

Yeah.

Senator Dave McCormick (23:55)

Or if somebody's premium goes from 200 to 400amonth. This is a huge deal. And so that's that. That's the segment of our population that I'm most worried about.

Becky Quick (24:05)

Senator, let's talk a little bit about. I you've been looking through some of the implications on a societal basis for an ethical basis for what AI is going to be happening overnight. The White House, the President putting out an executive order saying this is what we want. We want AI to be regulated by this policy that they couldn't get passed through Congress and directing the Attorney General, Pam Bondi, to go after and sue states that are trying to put their own regulations and frameworks in place. I understand that federal law should absolutely supersede state law when it comes to interstate commerce. But this is not federal law. This is a White House executive action.

Senator Dave McCormick (24:45)

Well, I thought the executive order was trying to thread the needle and hit the sweet spot very well in the following sense. So first of all, we're in an existential battle for leadership in the world. And if you believe the stakes are as high as I do, we have to have an innovation policy, policy and national posture that's going to allow us to maintain the lead. So a patchwork.

Becky Quick (25:06)

We haven't been able to get something like that through Congress.

Senator Dave McCormick (25:08)

We'll get a patchwork of state regulation is, is. Is very, very significant in terms of putting us behind in terms of China. So what the executive order says is that we want to have a national innovation strategy. It says that the states can move forward, as I agree with, on potential cases of copyright or protecting children. It also encourages and asks the David Sachs to move forward and work with Congress on a national standard. And then it has enforcement with broadband funding. And it also has, as you note, the Attorney General essentially being able to take action against overly restrictive. That balance of things I think is trying to do the things you said, which states need to have some freedom to deal with the issues that matter most to them. But we've got to have a national posture that doesn't put us behind. We already look at the front page of the Wall Street Journal today with energy supporting AI. AI and energy go hand in hand. If we don't have a national posture for maintaining leadership, I fear we're going to be left behind and probably the most important thing to happen in our lifetimes.

Becky Quick (26:14)

Senator Andrew's got a question.

Andrew Ross Sorkin (26:16)

Yeah, hey, Senator, just following up on where Becky was though, and I don't think we disagree. I think we agreed that there should be a national plan, but that that national plan should come from Congress. That, that is, that is the job of our elected leaders to come up with the policy for the nation and to decide and determine how that policy is effectuated. In fact, you could argue that the, the CEO is ultimately going to go to court. I mean, that's what's going to happen. And then there's going to be a debate and maybe it'll ultimately go to the Supreme Court for all we know. But, but sort of using executive orders as opposed to actually having Congress do its job, especially when you're getting into the issue of states rights versus federal government. I would think that, that even Trump supporters would say that that should be the approach.

Senator Dave McCormick (27:06)

Listen, you all know better than anybody, we are in a period of unprecedented change, the pace of change. So I agree with you. Congress needs to play its role in act.

Shriram Krishnan (27:16)

Act.

Senator Dave McCormick (27:16)

And what the President's done, which I think is a real contrast to the last administration, is laying out a pro innovation framework for how to pursue that. And you know, I'm a strong believer the, the, the national strategy needs to be a very aligned one. The executive order lays out what that balance should be. And it also, as you suggest, lays out a path and goal of collaborating with Congress to put that national standard in place. So, so, you know, we are at a pace of change here where I think the President needs to step up and show leadership, which is what I think he's doing. And I agree with you that Congress needs to do the same.

Mike Santoli (27:54)

What, aside from the copyright protections and protection of children in a state law, is the industry and the administration most concerned about being added in terms of regulation? I'm just curious what the, you know, what the stakes are.

Senator Dave McCormick (28:10)

Well, I'm not sure. You know, there's a lot of different variations. But, but I would just point to this energy issue, which, which I think is, is a good analog. Right now we have a patchwork of regulations and permitting across the country. Across America and the different states, we have a challenge to meet the energy demands of the most transformative technology in the world. That battle for AI energy leadership versus China is critical. And it's very hard for America to be the energy dominant country it needs without a very consistent permitting approach across. So I think these national imperatives, we got to think about having the right national standards. One of the things I think we need to focus on in the Congress is permitting reform on the energy front, national permitting reform. So I think it varies by states. Look at some of the standards that California or other states are thinking about in terms of restrictions. And I think it poses a real risk that if those frameworks, regulatory frameworks go into place, that we're going to lose the leadership battle in terms of technology innovation.

Becky Quick (29:18)

Senator, you are a former captain in the Army, a West Point graduate, and we have the Army Navy game coming up this weekend. I take it you'll be there.

Senator Dave McCormick (29:26)

I'll be there. It's, it's one of the great traditions. As I was telling you earlier. We used to take our six daughters with us and Dean and I would do the rocky run, which they would always complain about. It'd be cold. We'd run up the steps in Philadelphia, it's in Baltimore. And what my wife, Dean, always says about it, which is true, it's always a great game. It doesn't matter who's predicted to win, but no matter who wins, America always wins because it's really representative of two great institutions and great, great commitment and service to our country.

Becky Quick (29:54)

So you'll be rooting for the Navy?

Senator Dave McCormick (29:55)

Oh, no, I'll be rooting hard for, hard for army, yeah.

Becky Quick (29:59)

Senator McCormick, thank you for coming in today.

Cameron Costa (30:03)

Next on Squawkpod, more on AI legislation, with the official spearheading the administration's agenda, its senior White House policy advisor on AI, Sriram Krishnan.

Shriram Krishnan (30:14)

Right now, there are over a thousand different pieces of legislation in all of the 50 states that are trying to legislate AI.

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Andrew Ross Sorkin (32:05)

President Trump signing an executive order issuing a regulatory framework for artificial intelligence at the federal level.

Unknown Guest (possibly a business expert) (32:12)

We want to have one central source of approval. I spoke to all of the big companies, great companies, and they won't be able to do this. This will not be successful unless they have one source of approval or disapproval. Frankly, you can have disapproval, too, but it's got to be one source. They can't go to 50 different sources.

Andrew Ross Sorkin (32:32)

And joining us right now, first on CNBC is Sriram Krishnan. He's the senior White House policy advisor for artificial intelligence. He was inside the Oval Office yesterday for the signing of the executive order. We're thrilled to have you on the broadcast. And you've been working on this for a very long time. Tell us about the path to yesterday and how you've been thinking about the various issues at play in trying to balance them.

Shriram Krishnan (32:55)

Andrew, thank you for having me here. Yesterday, President Trump signed an executive order that essentially gives us a bunch of tools to push back against onerous state legislation on AI to paint a picture. Right now there are over 1000 different pieces of legislation in all of the 50 states that are trying to legislate AI and in this moment when we are trying to compete with China in this all important air race, we cannot have the people building AI try and comply with over a thousand laws in 50 states. President Trump recognizes that. He knows we need to win this race with China, that we are ahead in this race with China, and we keep it that way. And that is why this executive order was signed, to make sure that there is one national framework and not a patchwork of legislation.

Andrew Ross Sorkin (33:48)

Speak to how it's going to work in practice. And I ask because there was comments made yesterday that there were certain things that certain states have put into law around protecting children, for example, that you wouldn't necessarily go after, but some of those laws are attached to other things that you might feel less comfortable about.

Shriram Krishnan (34:09)

You're absolutely right, Andrew. So the way the executive order works is it gives the White House a bunch of tools, starting with the doj, the Department of Commerce, to go after what we deem to be owner's laws and over the last few weeks, we've spent a lot of time with Republican governors, a lot of time with the American people, and we are very clear that we will make sure that children are protected. Like anything to do with kids safety is absolutely not touched on by this executive order. Anything to do with, for example, copyright is a federal issue. But what we really want to go after, if you want to take an example, is something like what Colorado is doing, which is essentially trying to have every AI developer encode DEI into their applications. We have Colorado doing this, we have California doing this, we might have New York doing this. And we just can't have this if we want to win this race with China. So you're gonna see us start to use these tools. And eventually we know that this needs to be legislation passed by Congress. So we'll be working with Congress in the coming weeks and months to make sure there is a single national framework which makes sure we can win this race.

Andrew Ross Sorkin (35:24)

Well, that's where I was gonna go with this. And we talked to Senator David McCormick about this earlier. I would imagine, ideally you'd prefer Congress to enact a law as opposed to doing it via an executive order. And just what do you think it would actually take to get some kind of agreement on a national approach to all of this?

Shriram Krishnan (35:43)

Well, I think this executive order really kicks off the conversation and really plants a flag in the ground for what we stand for. One, we want to make sure a bunch of equities are protected. We want to make sure kids are protected. We want to make sure communities are protected, we want to make sure copyright holders are protected. But at the same time, we want to reject some of the doomer thinking that the Biden administration had that was embedded in things like California's SB53, which are essentially destroyed open source around the country. So the way we see it is the White House is now taking a firm stance where we want to push back on doomer laws that exist in a bunch of states around the country. And at the same time, we want to work with Congress so that that is one single national framework that protects our communities, but at the same time, make sure we win this race with China.

Andrew Ross Sorkin (36:31)

When you think about the phrase doomer, it's an interesting one because I know there's a lot of folks even in the industry themselves that have deep concerns about ultimately what happens with the technology and how it could both do fabulous things, but that maybe we are not, as a country or as a world ready for it when it comes to jobs and job losses. And what it does to society, cost do you have, you know, you've done a lot of work in the Valley. What are your concerns?

Shriram Krishnan (36:58)

Well, it's interesting, Andrew, because I think, you know, I hear two schools of thought. One school of thought is that AI is overhyped and are we investing too much in the economy on it? On the other hand, you hear a school of thought which is that I could lead to the Terminator and then destroy us all. And I think we sit somewhere in the middle. I think AI is a great tool. It is going to greatly benefit the American worker. Just to give you an example, the AI boom is a broad based boom. You know, I think when people hear AI they think it benefits Silicon Valley tech billionaires. That's not true. The Wall Street Journal had a great piece the other day about how, you know, AI has fueled a massive rise in construction and data centers. And this leads to jobs. For example, each of those jobs for either electricians, plumbers, technicians, you know, the people who make sure the concrete is poured. These lead to increasing wages and downstream impact. So this is a broad based boom and we are very optimistic about it.

Andrew Ross Sorkin (38:03)

Real quick, just the industry and how they're reacting because it does seem like there's different schools within the industry about this. I interviewed Dario Amodi, who's from Anthropic, they were building a super pac. Apparently, you know, effectively that's on the other side of a lot of the issues that, for example, Andreessen Horowitz, where you worked previously is. And so I'm just trying to understand what kind of battle and fight you're seeing. And to the extent that they came to visit with you, both sides I imagine to try to persuade you of their view.

Shriram Krishnan (38:36)

Well, I think we have a. At the end of the day, we want American AI to win. I think we might have a slight difference of opinion in sort of the doomer view views that some of these folks have. But essentially in my view, we are AI is probably powering the U.S. economy. You know, there are economists who feel that up to 2% of our GDP growth is coming from there. We are nowhere to see some of the, you know, some of the risks that some of the doomers talk about, we are not seeing takeoff. We are not seeing AI that becomes sentient. There are no signs of that. So in our view, look, we're not ignoring the risk. If you look at the action plan, that is definitely, you know, measures we have taken to make sure we are protected from the risk. But at the same time we come at it from a space of optimism when it comes to AI.

Andrew Ross Sorkin (39:24)

Okay, Shiram, we want to thank you. Come on back. It's a longer conversation. We very much appreciate it.

Shriram Krishnan (39:30)

Thank you for having me, Andrew. You bet.

Cameron Costa (39:34)

That's the podcast for today. Thank you for tuning in. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrea Ross Sorkin. Weekday mornings on cnbc starting at 6 Eastern and going all three hours until nine to get the smartest takes and analysis from that three hour TV show right into your ears. You can follow Squawkpot wherever you're listening now. We'll meet you right back here on Monday. Have a great weekend.

Amy Javers (40:00)

We are clear.

Andrew Ross Sorkin (40:02)

Thanks, guys.

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