House Democrats led by Reps. Greg Casar and Maxine Waters introduced a resolution opposing an A.I. Bubble Bailout for technology companies, arguing that taxpayers should not rescue firms if an artificial intelligence investment bubble collapses. The proposal also calls for federal support for workers, retirees and low-income communities that could face harm in an economic downturn.
Casar, chair of the Congressional Progressive Caucus, and Waters, ranking member of the House Financial Services Committee, co-led the resolution. Eleven other representatives joined them as cosponsors: Danny Davis, Chris Deluzio, Valerie P. Foushee, Jesús “Chuy” García, Pramila Jayapal, Analilia Mejia, Delia Ramirez, André Carson, Jan Schakowsky, Brad Sherman and Rashida Tlaib.
Lawmakers Warn of an A.I. Bubble Bailout
The lawmakers say A.I.-related firms hold trillions of dollars in debt, much of it raised in opaque and unregulated private credit markets. They also say the stock market’s price-to-earnings ratio is almost as high as at the peak of the 1990s tech bubble. These are claims in the resolution, not findings established by the introduction announcement.
The resolution argues federal regulators have avoided robust scrutiny of complicated debt and equity arrangements used by A.I. firms. It also points to what the lawmakers describe as the Trump White House’s deregulatory focus and conflicts of interest related to A.I.
Casar said A.I. companies that fail should go through bankruptcy and executives who commit fraud should be held accountable. He said federal help should go to workers and retirees. Waters said companies and Wall Street are taking large risks with borrowed money and warned against expecting taxpayers to rescue them if those bets fail.
Resolution Proposes Accountability and Household Aid
The resolution urges Congress and federal agencies to oppose rescuing insolvent A.I.-related firms or shielding senior executives from accountability for reckless conduct. It also opposes emergency lending or direct capital infusions to keep insolvent companies operating or prevent ordinary bankruptcy processes.
Another proposal would oppose “golden parachutes” for executives whose risky or illegal conduct leads to insolvency. The text says they should face civil and criminal accountability and return ill-gotten gains, listing mansions, vacation homes, private planes, yachts and other assets.
On household support, the resolution calls for federal spending to create jobs and protect state and local government services. It also proposes robust unemployment insurance, nutrition support and housing assistance. Its authors call for protecting pension and retirement fund holders who may suffer losses if an A.I. bubble collapses.
Further proposals include transparency and accountability requirements intended to prevent speculative bubbles. The resolution also backs automatic economic stabilizers, described as investments in people that begin flowing immediately during downturns, financial crises or asset bubbles.
Waters compared the proposal with the 2008 financial crisis, saying banks received bailouts while millions of Americans lost jobs, homes and retirement savings. The announcement says the resolution contrasts trillions of dollars in liquidity for the financial sector with 10 million homeowners losing their houses and tens of millions of workers going years without adequate employment.
Supporters Say Aid Should Reach Workers
Organizations endorsing the resolution include the American Federation of Teachers, American Economic Liberties Project, Americans for Financial Reform, the Center for Responsible Lending, Demand Progress Action, Future of Life Institute, Guardrails Action, Indivisible, Interfaith Centre on Corporate Responsibility, Investor Alliance for Human Rights, Jobs With Justice, P Street and Social Security Works.
Morgan Harper of the American Economic Liberties Project said Americans should not pay for an A.I. bailout after already bearing costs she associated with the industry’s expansion. Maya Jenkins of Americans for Financial Reform said the resolution offers a path to oppose bailouts and hold executives accountable. Those statements are supporters’ arguments.
The proposal has not itself enacted these policies. Its next step is consideration by Congress; the announcement does not specify a schedule for that consideration.
For context on business risks, Block Editorial previously covered a CEO discussion of market uncertainty and business conditions facing local companies. Its reporting on cybersecurity risks for care providers and OP Labs’ financial partnerships offers related technology and business reading.
Read the Democrats’ resolution announcement for the lawmakers’ full account of its proposals and endorsements.
