Dive Brief:

• The Senate on Tuesday passed a massive tax-cut and spending bill after stripping language to pause artificial intelligence regulation at the state level for 10 years.
• The AI provision was removed in a 99-1 vote before sunrise on Tuesday, with only Sen. Thom Tillis, R-N.C., opposed. The action came after an effort by Senate Commerce Chairman Ted Cruz, R-Texas, to advance compromise language with a five-year moratorium fell apart.
• “This allows us to work together nationally to provide a new federal framework on Artificial Intelligence that accelerates U.S. leadership in AI while still protecting consumers,” Sen. Maria Cantwell, D-Wash., the Commerce Committee’s ranking member, said in a statement posted on X.

Dive Insight:

Under pressure from Trump, Senate and House Republican leaders are racing to get the legislation across the finish line by the July 4 holiday.

In May, the House narrowly passed a version of the bill with a provision to freeze state AI regulation for 10 years. Before the legislation can reach the president’s desk for his signature, either the House must pass the Senate version, or the two congressional chambers must resolve any differences between their bills.

The Senate bill passed on a 51 to 50 vote, with all but three Republicans supporting the measure. Vice President JD Vance cast the tie-breaking vote.

Ahead of the vote, Cruz floated compromise AI language. He agreed to reduce the proposed moratorium period to five years instead of 10. He also agreed to exempt certain laws from the moratorium, including those designed to regulate deceptive acts or practices, child online safety, and the protection of a person’s name, image, voice, or likeness.

On Monday morning, U.S. Commerce Secretary Howard Lutnick praised the updated language, calling it a “pragmatic compromise” between Cruz and Sen. Marsha Blackburn, R-Tenn.

But, in a surprise move, Blackburn later rejected the compromise provision, saying it was still “not acceptable.” She said it would “allow Big Tech to continue to exploit kids, creators, and conservatives.”