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, with only Sen. Thom Tillis, R-N.C., opposed. The vote came after an effort by Senate Commerce Chairman Ted Cruz, R-Texas, to craft compromise language, with a five-year moratorium, fell apart.
• “The Senate came together to say that we can’t just run over good state consumer protection laws,” 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 bill reaches the president’s desk for his signature, the two congressional chambers must resolve any differences between their versions.

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 sought unsuccessfully to shore up support for 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.”