The U.S. has already picked up some lessons from the Green New Deal. If an industry depends solely on special privileges to survive, it likely isn’t ready to sustain itself independently.
Yet, we find ourselves in a similar situation with artificial intelligence. The richest corporations ever are now benefiting from a variety of advantages—think about extensive tax breaks, unique zoning allowances, and much more than what green energy companies receive.
Maybe it’s time for Washington to slow things down instead of accelerating further.
If AI is the powerful force it’s made out to be, it should be able to succeed based on its own strengths. Innovations that aim to enhance human life shouldn’t need human subsidies to thrive.
Unusual Investment
Proponents of Big Tech are saying we’re on the edge of achieving artificial general intelligence. While no one can dismiss the influence of AI or its potential future benefits, is it reasonable to justify the overwhelming wave of investments that currently represents a huge part of U.S. economic growth?
The previous administration seems to want to harness the wealth from big tech to fuel what could be a never-ending bubble. As highlighted by a recent observation, the profits of major corporations once came from low-cost intangible assets like software and platforms, drawing users into systems like Facebook and Google.
However, the current AI landscape feels different. Rather than just expanding software at a minimal cost, large tech companies now find themselves deep into physical assets like land and hardware—with energy and water dependencies that affect millions. These massive data centers consume resources in an alarming way.
Data indicates that, while free cash flow and net profits for companies like Alphabet, Amazon, Meta, and Microsoft have remained steady from 2016 to 2023, there’s been a staggering 73% rise in net profits but a 30% decline in free cash flow since 2023.
For all its potential, the economic benefits of AI remain uncertain. It’s been noted that while OpenAI and leading developers of large language models are growing, they are also losing money.
Concerns have been raised about skyrocketing chip prices and the hefty demands for constructing data centers that consume vast amounts of power. This undeniably presents a huge challenge.
Some troubling signs are already surfacing—recently, the much-anticipated GPT-5 has largely failed to impress. Meta has even put a halt on hiring in its AI division, with Mark Zuckerberg acknowledging that progress has been slow. Reports suggest that simply feeding more data and computing power into a large model doesn’t automatically create superior AI.
Government Overdrive
And yet, the government is still pushing forward, seemingly ignoring the industry’s recent obstacles. The so-called “Mag 7” companies have collectively shelled out a whopping $560 billion on AI-related investments in just 18 months, despite generating only $35 billion in revenues. Consulting firms predict that $475 billion will be spent on data centers this year alone—up 42% from 2024—numbers that imply substantial government involvement.
Reflect for a moment on this.
Changing Zoning Rules. Data centers need a lot of land. States and counties are bending rules, waiving regulations that wouldn’t even apply to power plants or roads. In Northern Virginia, there are either active projects or plans for around 85 million square feet of data center space—roughly the size of 1,500 soccer fields. States like West Virginia and Mississippi have even outright eliminated local restrictions. The AI Action Plan is pushing for federal grants that ease zoning rules, which doesn’t seem fair or market-driven.
Tax Breaks. Many states competing for data centers—like Virginia, Texas, and Indiana—offer substantial tax incentives. Alabama fully exempted data centers from sales, property, and income taxes for up to 30 years, while others also extend property tax exemptions.
Shifts in Regulations. An executive order is pushing to loosen regulations under various environmental laws. There’s a common conservative push for fewer regulations, but it raises the question: why does Big Tech need these expedited processes more than, say, traditional power plants?
Federal Land Grants. The AI Action Plan is also making federal land available for private data centers, essentially gifting prime real estate costs to billion-dollar companies. Other industries don’t seem to benefit from this kind of treatment.
Ending Scams
Florida’s Governor Ron DeSantis bluntly put it: “Using technology to improve human experiences is one thing; replacing those experiences is another.” Today, AI feels like an unpredictable trend, surviving on the backs of large taxpayers.
If AI is the groundbreaking technology its advocates suggest, it should be able to flourish without handouts and special exemptions. I mean, if it can’t survive without these perks, maybe it’s not as ready as we thought. Washington really ought to rethink its approach and slow down a bit.
