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July 18, 2025 14 mins
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Speaker 1 (00:00):
There was a thing that looked to me like what
was gonna be in the so called big beautiful Bill,
but then ended up not being there about regulating AI.
And I imagine that this is still something that is
going to come up in Congress, even though it didn't
show up the way I thought it might in the BBB,
maybe because of maybe because of Senate rules. We'll see

(00:23):
when we talk with our next guest. Juan Londonio is
chief regulatory analyst at Taxpayers Protection Alliance. We've had folks
from Taxpayers Protection Alliance on the show in the past.
Protecting Taxpayers dot org is the website, and he wrote
a piece for my former writing home, The American Spectator

(00:43):
entitled don't let California write America's AI laws, And the
subhead is this is one area the federal government should regulate,
not each individual state.

Speaker 2 (00:55):
So with that, Jan Londonia, welcome to KOA.

Speaker 3 (01:00):
Yeah, Ross, thank you so much for having me.

Speaker 1 (01:02):
What I want to start with the big picture here,
What is the issue at hand? What is the regulatory
overview of AI that has you concerned and that makes
you think Congress needs to act?

Speaker 4 (01:15):
So Ross, I think the key statistic right now is
one thousand, one thousand state level bills have been introduced
in twenty twenty five alone trying to regulate AI.

Speaker 3 (01:28):
So that's creating a.

Speaker 4 (01:29):
Compliance nightmare because you have these companies that are trying
to catch up. The chemists are trying to comply with
all these laws that I are being passed and introduced.
But there's also not a lot of clarity over what
jurisdiction applies. Because for example, right now during Colorado, right
I am in Virginia and we're communicating over the internet,

(01:52):
So like that business can be headquartered in California, but
the infrastructure like data centers and stuff like that can be.

Speaker 3 (02:00):
In Louisiana, to say the least.

Speaker 4 (02:02):
So the Internet, and this has been a problem with
the Internet and the conversations, like with data privacy, you
don't really know what laws apply, or users don't know
if I'm using the services of any tech company or
this case, an AI company that is based in say Colorado,
with the loss of Colorado apply or the ones in Virginia,
and that is creating a lot of confusions both for

(02:25):
businesses and consumers. And that is going to create a problem.

Speaker 1 (02:29):
And I don't know whether you've had much time to
look at what's going on specifically here in Colorado. But
we did pass the law in Colorado last year that's
supposed to go into effect soon, and a lot of
people who have paid close attention to it think that
this law is going to have a bunch of really bad,
unintended side effects, And there was a move in the
state legislature that did not succeed in this most recent

(02:53):
legislative session to delay the implementation of the law.

Speaker 2 (02:57):
And now there's some talk.

Speaker 1 (02:58):
We don't know if it's going to happen yet, about
a special session of the state legislature that could potentially
be next month. If it happens, that would mostly be
about fiscal stuff, but there's talk about addressing this there too,
because it seems like a bunch of people wrote stuff
without fully thinking it through.

Speaker 3 (03:17):
Yeah.

Speaker 4 (03:17):
Ross Actually the Taxpayers Potential Alliance file comments in against
this Colorado BIBLTS.

Speaker 3 (03:23):
I think it's we think it's very onerous.

Speaker 4 (03:25):
There's a lot of report reportant requirements that are going
to create a lot of busy work for AI companies,
and the problem is that usually benefits incumbents and large
AI capitalized businesses and small business are going to suffer.
But the problem aside from that is that it creates
another effect is sometimes, and we've seen with other regulations,

(03:47):
like with data privacy.

Speaker 3 (03:48):
It is usually that companies will default.

Speaker 4 (03:51):
For the most expensive or most strict legislation to kind
of become a nationwide standard. So the thing is like now, example,
right now Colorado is the worst offender, and a lot
of companies would say probably default to Colorado. But that
creates an incentive for California or New York if they
want to say, become the national standard or have companies

(04:13):
comply with what they want.

Speaker 3 (04:15):
The incentive is to regulate even more, to be even
more expensive.

Speaker 4 (04:18):
It's a race to the bottom, and you have like
states pre dating each other instead of like for innovation,
which is what we usually see under federalism, it's to
create regulatory barriers and create and bog down the market.

Speaker 1 (04:32):
This reminds me a little bit, and you can tell
me if this is a fair comparison or not, but
of what happened for many years, and it seems like
maybe it's over now thanks to the Trump administration of
California imposing the is incredibly onerous standards on vehicle emissions
and it's slightly different from what you said in that

(04:52):
under federal law, other states were not allowed to create
their own standards, but they were allowed to adopt California standard.
And so recently the Trump administration basically eliminated a bunch
of that. So California in some areas can't do their
own standards. Now Colorado, being East California, was following California's standards,

(05:15):
and you know, at great expense. And so I wonder
if this is something if this is kind of a
way to think about that.

Speaker 3 (05:25):
Yeah, it's a very similar way.

Speaker 4 (05:26):
I think you've nailed the nail of comparison pretty pretty
one to one.

Speaker 1 (05:32):
So can you just elaborate for us in just plain
language that you don't have to be an expert to
understand what some of the burdens from Colorado's law would
be if Colorado, when, if, and when Colorado's law comes
into effect unmodified?

Speaker 3 (05:52):
Sorry, can you reid that question?

Speaker 2 (05:53):
What will the.

Speaker 1 (05:54):
Burdens to Colorado Colorado users of AI or companies that
want to be AI companies?

Speaker 2 (06:01):
What will the burdens be from Colorado's law?

Speaker 4 (06:05):
I think a key part of it, and I think
where a lot of consumers will see. The burden will
be companies that decide to use AI in their businesses,
because the Colorado Bill affects not only those who develop AI,
but also those who deploy it. So if you, as
a business owner realize that say a chat bought is

(06:28):
very good for customer service and to process claims or
refunds more quickly, if you deploy AI, you will be
subject to some of these reporting requirements and you will
have a great set of responsibilities because you deployed an
AI agent, and all of a sudden, if you're a

(06:49):
retail business, are used to just selling goods and services,
all of a sudden, you have to have someone doing
impact assessments on stuff and like that. That creates a
lot of compliance burdens on people that like, all of
a sudden, you have to become an AI expert if
you're in the qualify in the regulatory categories.

Speaker 1 (07:10):
So part of the reason that people might take on AI,
there's two main reasons. One you think it'll do a
better job at a particular thing. The other, and I
think this will be the main driver for a lot
of companies, is that you think it'll be a cost savings.
So what you're saying now, is that what the Colorado
Bill might do is eliminate the cost savings or at
least partly eliminate the cost savings by adding regulatory compliance requirements.

(07:32):
And then to go back to something you said earlier,
which is absolutely true. And I'll give another comparison, and
that's with banks. Big banks. The biggest banks always cheerlead,
almost always cheerlead congressional regulation of banks, no matter how
onerous they are, because the biggest banks know that they
can afford to comply and smaller banks can't. So smaller

(07:56):
banks are either then going to have to go sell
themselves to the biggest bank or go out of business,
and anybody else who wants to start a small bank won't.

Speaker 2 (08:04):
So is there a comparison there.

Speaker 1 (08:08):
Yeah.

Speaker 4 (08:09):
I think it's something that we've seen in the realm
of economics and various industries. Most of the time is incumbents,
most of the time benefit from regulation, and especially regulation
that drives up costs, that creates busy work, because as
you mentioned, like example, a lot of companies will decide
to deploy I because they are able to.

Speaker 3 (08:29):
Get stuff done that he couldn't do before. I could
have a graphic designer.

Speaker 4 (08:34):
By having an LM produce a graphic produce something to
say I'm making a sale, all of a sudden, I
don't have to hire a graphic designer that maybe I
couldn't afford before, but all of a sudden, I also
have to pay to comply with this AI lass because
I'm considered a high risk industry for example.

Speaker 1 (08:53):
Okay, So, as somebody who is very fond of the
United States Constitution and the federalist structure of our nation,
where there are very limited numbers of places where I
think it's appropriate for the federal government to dominate the states,
how can you convince me that this is an area

(09:15):
where it's appropriate for there to be federal preemption of
states and for the federal government to say states should
not be allowed to regulate this on their own.

Speaker 4 (09:28):
So, going back to what we're talking about of how
this regulation expands over the jurisdiction that they passed. You
mentioned California. California's laws on an efficiency will impact the
whole nation.

Speaker 3 (09:40):
It creates tension between states.

Speaker 4 (09:42):
And that's what it triggers what it's called the interstate commerce.

Speaker 3 (09:46):
And you can think that.

Speaker 4 (09:46):
The Congress has the thoray to regulate inter cerate commerce,
to prevent states from sabotage in one another, and to
create in this case a free flow and actually facilitate
trade between states.

Speaker 3 (10:00):
That's what the moratorium, I think, at the end, wanted
to do.

Speaker 4 (10:02):
It's call aposts from the states, tell them, Look, there's
too many stuff being passed.

Speaker 3 (10:06):
Too many laws have been passed.

Speaker 4 (10:08):
A US Congress is going to create an uniform nation
wide standard that's going to make it easier for consumers
to know what their rights are and businesses to know
what their responsibilities are. And it's actually I think that
fosters more market efficiency than anything else.

Speaker 1 (10:23):
We're talking with Juan Londonio, chief regulatory analyst at Taxpayers
Protection Alliance Protecting Taxpayers dot org.

Speaker 2 (10:30):
He's got a piece up at American Spectator.

Speaker 1 (10:32):
Called don't let California write America's AI laws.

Speaker 2 (10:36):
Last quick thing on this one.

Speaker 1 (10:39):
Part of what troubles me so much about state regulation
of this stuff is that it is most likely being
written by people who know very very little about the subject.
And I don't mean to, you know, just you know,
criticize legislators as a blanket thing.

Speaker 2 (10:58):
Although I'm happy to do that too.

Speaker 1 (11:00):
But this is a very complex, very high tech, and
maybe most importantly, very very rapidly changing thing that even
the biggest expert in the Colorado State Legislature, or the
biggest expert state rep the biggest expert state Senator knows
almost nothing, and whatever he or she thinks he knows

(11:24):
will be mostly irrelevant in a week or a month,
and definitely irrelevant in a year.

Speaker 2 (11:29):
And that's that's why I'm.

Speaker 1 (11:31):
Afraid of these state level regulations, because they're going to
be done, they're always going to be behind the curve,
and they're going to be done by people who don't
know what they're talking about.

Speaker 4 (11:42):
Yes, And I think and that's why taxpayers protection lines
we advocate for prudence. But also I think that the
problem that you mentioned is very notable in emergent technologies,
new technologies where there's a lot of hype, and i'd
say with AI, there's a lot of hype, both in
pessimism and optimism, and a lot of the things that
they're trying to regulate and prevent might not even show up,

(12:04):
but it might also caretail future uses that we don't
know was beneficial. Even in this high rates industry, is
like houseeeing healthcare. It's like it's easy to think of
the worst case scenario, but you could also be regulating
away the best case scenario. And that's what we call
it for prudence to wait until this harms and issues
actually materialize, and once then you make targeted interventions based

(12:27):
in reality, basing what has happened, not in the in
what could have been.

Speaker 1 (12:31):
Frederick Bastiat would be very proud of you for that
particular analysis that which is not seen part, and it
is a fabulous point, and I just want to reiterate
that to listeners before we end our conversation with one
these regulators, and I do think, frankly, I think most
of them are well intended, but that doesn't mean that.

Speaker 2 (12:51):
What they're going to do is have a good effect.

Speaker 1 (12:53):
Lots of well intended things have either a few bad effects.

Speaker 2 (12:57):
Or mostly bad effects.

Speaker 1 (12:58):
So I'm not questioning intentions, I'm questioning their capabilities, and
I'm also questioning, as Juan said, the fact that politicians
almost never consider the wisdom of Frederick Bostiat to focus
not just on that which is seen, and in this case,
that which is seen as more like that which is
guessed about what could this bad result of AI be?

(13:19):
But what about the potential massive upsides of AI and
use cases that haven't been thought of yet that never
come into existence because they get regulated out of existence
in advance by these legislators who, again well intended, but
out of their depth. Juan Londonio, I'll give you the

(13:41):
last nineteen seconds because I like prime numbers to wrap up.

Speaker 4 (13:47):
Yeah, I think you nailed that, And I think for
policymakers my number one advice, I think it's sometimes stopped
looking for how AI could go wrong and see how
you can make it go right. And there's a lot
of positive thought frameworks States Montana to have thought of
the right to compute, for example, Love.

Speaker 2 (14:03):
It, absolutely love it.

Speaker 1 (14:04):
Juan Londonio, Chief regulatory analyst to Taxpayers Protection Alliance Protecting
Taxpayers dot org.

Speaker 2 (14:09):
Thanks for the great conversation. Enjoy your weekend.

Speaker 3 (14:13):
Thank you all right,

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