Trump-Backed Budget Plan Sparks Debate Over AI, Climate, Surveillance, and Health Policies

A narrow House vote advanced a sweeping budget package that restricts AI oversight at the state level, rolls back clean energy incentives, limits healthcare coverage, and boosts surveillance tech at the U.S. border.

Backed strongly by Donald Trump, the bill now moves to the Senate, where internal Republican concerns could complicate its path to becoming law.

AI regulation paused at the state level
The bill proposes a ten-year block on state governments passing or enforcing laws that regulate AI or automated systems. That could override a wave of new state laws expected in 2025, and even halt enforcement of many already on the books — some of which address algorithmic bias, AI use in government, or consumer protection.

Supporters argue this is necessary for U.S. companies to remain competitive against China, and some AI developers have endorsed the move. According to the National Conference of State Legislatures, more than 60 AI-related state bills have already been passed — many of which could be nullified under the federal moratorium.

Critics say the definition is too broad and could interfere with laws regulating automated decision-making, even if those systems aren’t technically AI. Some of those laws were introduced by Republicans themselves in areas like content moderation and algorithm transparency.

“Until there’s a federal law, states need authority”
Sen. Marsha Blackburn (R-TN), who may run for governor, expressed concern about losing local control. She referenced Tennessee’s recently passed AI law that protects artists’ voices from being replicated without consent. “We know those protections matter in Tennessee,” she said during a recent hearing. “We need federal clarity before we take state options off the table.”

Sen. Josh Hawley (R-MO), who opposed Medicaid cuts in the same bill, also raised red flags about blocking state oversight. “As a matter of federalism, states should be able to test out policies that fit their people,” Hawley told reporters. “AI deserves smart rules, not a vacuum.”

The rule may also face hurdles under the Senate’s Byrd rule, which prevents unrelated policy items from being included in reconciliation bills.

EV and green energy tax breaks targeted
Federal credits for electric vehicles would be phased out within two years, and many clean energy tax incentives would be ended early under the proposed bill. The rollback includes:

• A $7,500 credit for new electric vehicle purchases
• A $4,000 credit for qualifying used EVs
• Tax credits for EV charging equipment at home

Additional updates reduced climate programs previously protected under the 2022 Inflation Reduction Act. Some nuclear-related credits survived, but wind, solar, and infrastructure benefits were significantly narrowed.

Consumer protection agency funding capped
The Consumer Financial Protection Bureau (CFPB) — which had already seen major changes under the Department of Government Efficiency — would see its budget slashed further. Under the House bill, the CFPB would be limited to receiving only 5% of the Federal Reserve’s operating budget, down from the current 12%.

That would shrink its ability to handle consumer complaints, regulate digital payments, and protect borrowers from fraud or aggressive collection actions.

Billions pledged to border surveillance systems
The proposed budget includes major increases in border enforcement funding. That includes:

• $12 billion for state reimbursement programs for border security
• $46 billion for wall expansion and upgrades
• $2.7 billion for surveillance tech
• $1 billion for drug and contraband detection systems

The bill outlines funding for unmanned drones, ground sensors, surveillance towers, tunnel detection equipment, and new communication tools aimed at expanding surveillance across the U.S.-Mexico border.

Restrictions on gender-affirming care added
Starting in 2027, health plans sold through the Affordable Care Act would be barred from covering gender-affirming treatments, including hormone therapy and surgeries. The bill also prohibits Medicaid from funding gender transition services for minors and adults — while requiring it to cover procedures related to detransition.

The language mirrors similar state-level restrictions introduced in recent years and signals a national approach to limiting access to this type of care through public health programs.