Trump’s New AI Czar + Nvidia Exec Caught Smuggling Chips to China

Adam, great to have you back. How you doing?

So the person who got the job as AI czar, this is the second AI czar of the second Trump administration, is Jay Clayton. And folks may remember seeing him in the news in the not too recent past because he was in just August named as the director of national intelligence. So the sort of senior person overseeing the United States intelligence community and overseeing the president's daily briefing on intelligence. Before he was DNI, he was the US attorney for the Southern District of New York. And that is the same position that Rudy Giuliani held. That is the same position that a number of very influential legal minds in the United States have had. That is the court that oversees the US financial industry. So it's a very important district to be US attorney for. Jay Clayton has historically been a skeptic when it comes to China, on economic security issues, on national security issues, and he has also been, I think it's fair to say, pretty warm to some of the arguments that the Trump administration has made around AI. So, it's unclear just exactly where he's going to land, but so far, unsurprisingly, because he's just got the job, all of the positions that he's expressing are in line with what this administration is saying at once. Namely, we're going to focus on the existing authorities.

Now, one thing I should say is that this AI force, which again, given the Trump administration's name change, is going to be called the Super Intelligence Force. Well, there's been a radical rescoping because previously President Trump had compared it to his idea of the Space Force, which would have been a new branch of the United States Armed Services. Now, it's much closer to a policy task force. This is a group of folks, some of which have other jobs in the government of significant importance, and they've got 120 days to come up with recommendations to improve the US government's posture on AI within existing authorities.

Okay, let me say a little bit also about the structure of the super intelligence force. So, in addition to Clayton as the chair, you've got three vice chairs. Those are Emil Michael who's currently the under secretary of war for research and engineering. He's going to lead coordination with AI companies as part of this super intelligence force. You've got Scott Kapor who's the OPM director and he's going to lead critical infrastructure and other industry stakeholder type engagement. And then you've got Andrew Ferguson, the FTC chairman, and he's going to lead outreach to consumer interests and advocacy groups focused on faith, children, privacy, and freedom of expression. So that's a very interesting group of three folks. First off, Emil Michael used to be a senior executive at Uber, so strong Silicon Valley bonafides. Scott Kapor was a former Andreessen and Horowitz A16Z managing partner. So also very strong Silicon Valley bonafides and it's worth pointing out that A16Z has been among the strongest forces politically advocating against AI regulation throughout the Biden administration and the second Trump administration.

There's other folks who are a part of this super intelligence force and that includes vice president Vance, secretary of war Pete Hegseth, Secretary of the Treasury Scott Bessent, chief of staff Susie Wiles and Deputy Chief of Staff Richard Walters. Interestingly, there are two folks who are currently sitting outside government or partly outside government and that includes David Sacks, the former AI czar, and Condoleezza Rice, the former Secretary of State and National Security Adviser in the George W. Bush administrations, which was kind of an interesting addition.

Exactly. Right. Like she's got a strong Republican resume, but I normally don't associate her with having a strong Trump Republican resume. So that was an interesting choice. So the components and the vice chairs give you sort of a theory of the case. There's also an explicit charter, and I'll read the quote here. This was reported in the Wall Street Journal. Quote: develop plans for responding to SI enabled threats to our society while preventing overregulation and regulatory capture that would stifle innovation and competition. So I think that very much tells you that's where this government is. Now, another thing that's interesting about this charter is it's going to review how breaches, hacks, and jailbreaks get reported to the government and quote recommend ways to improve the government's response capacity under existing authorities. End quote. So what I think is so interesting about that is they're acknowledging the presence of SI enabled threats to our society, but they are focused on making sure that whatever the response is, it's going to be handled under existing authorities. And so what I think is kind of contradictory about that is there's a fact-finding element of this mission, right? Review how breaches and jailbreaks and hacks get reported to the government. They don't claim to fully understand how it happens now, but they know that whatever is going to be required to fix it is not going to require expanding their own authorities. And I think that is kind of just being fixated on the argument they've been making publicly and being consistent with it as opposed to being open-minded about what they're going to learn and how it might change their opinion. They're sort of putting the conclusion before the analysis, which I think is frankly an error even if it turns out to be perfectly reasonable. So the focus remains on light touch regulation and I don't think that's going to change. But there's one thing I want to point out here. What we just described, that charter, that reflects the administration's expectations for the future, expectations for what they are going to do, and they may prove to be wrong in predicting their own future behavior.

And the reason why I think this is important to remember is the fact pattern may force their hand. And there's at least two ways that that could happen. The first is we could have additional AI safety and security incidents that really cause folks in serious power positions to ask themselves whether or not more is needed. Recall that the Trump administration's original negotiating position was let it rip, do effectively nothing on regulation. The new policy position is do something but only under existing authorities. And that is because of the change that we've seen with Mythos, with the OpenAI Hugging Face incident, with the spate of child safety tragedies that have occurred in relation to AI. And so this is my point. They're predicting their future behavior, but the facts on the ground may change their minds in the future the same way it's already changed their mind in the past. And the second thing that could change is the political reality of the situation. So recall that the Trump administration was pushing strongly for a moratorium on state level AI regulation and then when that failed in Congress they said okay we're going to explore some kind of federal regulation as a means to getting a state level regulatory moratorium passed. So they recognize when they are blocked politically and they change their policy pronouncements and recommendations and efforts in response to the politics on the ground. And the politics on the ground for AI are bad and getting worse. A non-trivial share of the United States population thinks that the extinction risk of AI is high or moderate. And a huge majority of the population hates AI data centers and supports greater AI regulation. So you have folks like Susie Wiles, the chief of staff, for example, who are very sensitive to that political reality. And so if the politics continue getting bad, if the midterms turn out poorly for Republicans, I think you could see what the super intelligence force is saying they're up to might not be a good prediction.

So he's by no means a bombthrower. He's by no means somebody that's caught out of center. He's certainly somebody that Mark Warner, who's a moderate, but a very thoughtful person who's been either the ranking member or the chair of the Senate Intelligence Committee for years, significantly supported. So I think there's a very thoughtful move going forward at least for the staffing the head of this organization.

So I think the government is for now still committed to the approach represented in the AI accord that is barely a week old at this stage which is emphasizing industry self-regulation potentially combined with FTC style investigations focused on liability type regulation. But one thing that I think is very interesting about Jay Clayton, is in addition to the strong endorsement that he got going into his nomination, which was ultimately on a party-line vote, but that had to do with stuff separate from his qualifications for the job. The other thing about Jay Clayton is that he still has a day job which is director of national intelligence which means he's going to be consuming all kinds of intelligence and national security assessments on AI. And Jay Clayton was not in the seat as director of national intelligence when the National Security Agency was freaking out about what Mythos could do in terms of cyber power. But a lot of people who Jay Clayton is going to be seeing all day every day were in the weeds of that incident and are going to be consuming intelligence on all natures of AI threats and risks from a national security and intelligence perspective. So I think he's going to be naturally kind of injecting that theory of the case into this debate. And I think his selection guarantees that national security hopefully, I guess I said guarantees, but really I should say hopefully gets a fair hearing in this story.

So I still think yes safety is back right I mean look at the language in the charter SI enabled threats to our society. So I think the government admits that there are risks here. There is a problem here. The Trump administration admits that something has to be done because good outcomes are not guaranteed. We actually have to work towards those outcomes. But there was some great reporting in the Washington Post over the past week basically saying that even though safety as an idea is increasingly welcome in the administration, there is still contempt for the so-called doomer philosophy around AI safety. They don't like hearing about extinction level risk. They don't like hearing about how AI is some massive threat that's as big as nuclear weapons. So yes, they're not completely ignoring what's going on with AI and cyber security. They're not ignoring what could be going on with AI and biosecurity, but I think they really have sort of an immune reaction to these existential framings or these doomerous framings or these sky is falling framings because they fundamentally have an incredibly optimistic view of what is likely to happen with AI and I think they really do worry about this regulatory capture risk which I don't think is an accurate interpretation of what's going on in terms of the behavior of these companies, but it's certainly a consistent position they've been arguing for.

So, one thing that was in the AI accord that I thought was really interesting, sorry, I shouldn't say AI accord, the super intelligence accord was that it commits the signatories to partnering with an independent external auditor or evaluator. And what's interesting is if you look at what David Sacks said on his All-In podcast, which he also hosts with his colleague Chamath, Sacks said, quote, "In my view, they should be professional auditors, not these NGOs." So he basically wants like the big consulting firms to be the one who are auditing AI safety inside the labs, not nonprofits. And what's so remarkable is that Chamath, also a venture capitalist and also the co-host of the podcast, he said on the same episode that his startup 8090 is building EY as in Ernst and Young, the auditing and accounting firm, quote, "An entire audit infrastructure for super intelligence." Goes on to say, quote, "You're going to see EY in short order here announce something." End quote. And I just have to call out what appears, at least on its first face, to be jarring hypocrisy here. You've got folks like Chamath arguing about the risks of regulatory capture when it comes to AI safety. And now he's saying specifically the nature of AI safety regulations should push people towards private sector auditing firms who his portfolio companies are developing technology for. Right? You want to talk about like regulatory capture that is certainly a plausible way that one could execute a strategy of regulatory capture. And so I don't like to see it. And what I did like to see was the quote from Adam Gleave of the Frontier Alignment Research. This is an AI safety nonprofit. And he was quoted in the Washington Post saying, quote, "When it comes to looking at millions of agent transcripts and trying to piece together what they did and how they were interacting, I don't think there are many organizations in the world that have that expertise." End quote. And so this is what I want to point out. Who should be doing the audits? Who should be doing the outside evaluations? It should be a choice based on who has the competence, who has the best tools. And right now, what I see in the market, what I see in the world is that that is mostly these NGOs that are being attacked with contempt by folks like David Sacks, who said some very mean things about METR, for example, which was one of the principal authors of the OpenAI Hugging Face incident report. And if EY ends up acquiring that level of competence, great. But the focus needs to be on who has the skill set, not who your companies have profitable relationships with.

Yes. And both sides of what you just said are super important. What the state's attorney generals are doing and what the FTC is doing. Now the FTC probe is pretty remarkable. It covers Anthropic, OpenAI, other labs plus METR which both labs have used to investigate their incidents and FTC is leveraging its existing authority to investigate unfair and deceptive practices, not any AI statute because like what AI statute would they even point to? So that's a perfectly reasonable use of FTC authority. Under the Biden administration, the FTC did similar requests for information from OpenAI looking at user privacy concerns. I think the question here is, is that type of investigation going to be used to create political ammo for accusations of regulatory capture where they're going to say, "Aha, see METR and OpenAI said they really like each other. That must mean they're colluding." That would be a disaster. I seriously hope that doesn't happen. I really hope that the government is just trying to get smart on what's going on under the hood here. So, we'll have to just see what the FTC is doing, but it's certainly plausible that what the FTC is engaged in is not going to be the most useful bag of tools for trying to improve AI safety.

But think about what California is doing. The California's attorney general served OpenAI an investigative subpoena on September 30th and this is a really broad inquiry into the cyber security incidents around OpenAI and the attorney general who's Rob Bonta he said quote companies have a moral and legal responsibility to ensure that they do not perpetrate or enable cyber attacks either during model testing and development or once models are placed into service. developers that fail to do so can and should be held legally accountable. And I thought what was very interesting in that quote was that he focused on during model testing because California's SB53 AI safety law had a carveout for model deceptive behaviors that occurred during the evaluation designed to elicit it. So the Hugging Face incident was not under the original text of SB53. SB53 was about reporting requirements, transparency requirements. It was a safety transparency bill. But what he's sort of saying is that under other laws around criminal negligence or other items, these companies still have a duty. So it's kind of interesting there that he's dwelling on liability law or other tools in the toolbox, the existing tools that the Trump administration has been so willing to focus on, but it seems like he's willing to take it farther.

The second thing that I think is going on is that the Iowa Attorney General, Brenna Bird, is leading a 15-state coalition, including Alabama, Arkansas, Texas, and Utah. So, solidly Republican states seeking information from OpenAI on the Hugging Face incident. And of special note going on in Florida, Florida's attorney general in late September asked the state court to block OpenAI from building new models without outside approved safeguards. And Florida, I think every statewide office, including the attorney general, is held by the Republican party. This is what I think is important to keep in mind as you're asking yourself, what is the Trump administration going to do? Look at what Republicans are doing at the state level. They are trying to find ways to demonstrate that they are being tough on AI, that they are promoting safety. And I think that is the political reality that I was talking about. The let it rip posture is not just unpopular nationwide, it's unpopular in the Republican party. And so whatever this super intelligence task force is going to figure out, it has to reconcile its actions and recommendations with that political reality which at least for right now appears to be getting worse on AI, not better.

Yes. And first off, great point. That is something worth separating. Just don't offer it for sale. Like guys, it happened during the period when I was testing it to see if it was safe for sale. But I think the other question is in an ideal world, right? Our number one preference is not that murderers be punished, right? Our number one preference is that murders don't happen. That's what we really want. But given that we have an imperfect ability to prevent all murders, right? Our sort of second order preference is to ensure that murderers are punished. And when you think about AI type risks, if you are dwelling upon liability law as the primary tool, what you're focusing on is actors whose negligence result in something bad happening. You're focusing on let's punish those people. But there's the other side which is well wouldn't it be better if the bad thing didn't happen? Can we find what is the safeguards that we want to put in place to minimize the chance of that happening? And I think that has to be a focus here, right? We don't just want bad actors to be punished. We want bad actions to be prevented.

So, think about what the Florida Attorney General is asking a court to do. It's asking the court to stop OpenAI from releasing new models until and unless those models have outside approved safeguards. And I think the quote from the attorney general motion is really juicy here and it's worth reading. So quote, "Defendants claim they cannot stop barreling forward with their potentially civilization ending endeavors unless they are forced to do so by the government. They have asked the government to tie them to the mast. Plaintiff brings good news to the defendants. The Florida Attorney General is answering your cry for help with a motion to enjoin you from harming Floridians with your reckless, unacceptably risky product." End quote. Now, number one, great reference to the Odyssey there. But number two, this actually doesn't solve the problem as the AI companies are talking about it, right? The AI companies are talking about a race to the bottom on safety that affects the entire AI ecosystem. And that's why they're looking for regulations that apply generically, not merely this kind of motion, which applies to a handful of companies specifically. So, on the one hand, it's a very juicy quote that sort of reveals the political state of play and how powerful actors are interacting, but I don't think it quite addresses the specific rationale being used for the AI companies when they're calling for binding regulation.

So, this is a huge part of the debate in AI regulation right now. There was a good quote in the New York Times from an interview with Woodrow Hartzog, who's a professor at BU Law, I believe, and he said, quote, "Worst case scenario, they meaning the big AI companies, have massive liability on both the criminal and civil side. We haven't seen the firm busting case yet, but I could envision it." End quote. And so when you think about like Meta for example recently being forced to pay billions of dollars in damages related to child safety as part of court cases. It's not like liability law is toothless. It's a very powerful tool. Although apparently it wasn't enough of a disincentive to stop Meta from doing the things that resulted in them losing that court case. But I think that there's like a big question about what we were just talking about. Do you want folks to be punished after the harm occurs or do you want to prevent the harm from occurring by having mandatory safeguards in place? But one thing is key to ask the question when you talk about liability is who is liable? And at least for right now, the focus in Washington is on the companies that build and direct the agent, not the agent itself. AIs don't have legal rights and not on the deployer, at least not yet. So, not on the user of the AI agent, which could change over time. We'll have to see. But FTC Chairman Ferguson, he said, quoted in Reuters, I'm going to continue as long as I am chairman to resist this anthropomorphizing of these tools. If someone tells a tool to do something and the tool does it, I don't think we would say, "Oh, what do we do about the tool?" end quote. So the point here is that we're not going to put AI agents in jail. We're not going to try to punish Claude. We're going to try to punish Anthropic. But I think the other part of the debate that really needs focus is around the deployers. So what if hypothetically Claude is used by a customer to do something that results in harm, right? I do not expect this anytime remotely soon. But what if a company involved in nuclear reactor safety equipment asks Claude to upgrade its software and then the nuclear reactor fails. In that case, maybe Anthropic is the one who is going to be sued for liability, but I think it's probably going to be the nuclear reactor company at least in part. So that is one part of the story that folks aren't really focused on in public but was a huge part of the debate in for example the EU AI act. In some ways you could argue that the current cases that we have are like easier to think about from a liability law perspective because there's no reckless or careless customer to think about. This is the developer running the agent itself. But there is a question about how liability law is supposed to do anything about open source in this story, right? Because what open source might allow is for much less well-resourced actors or for actors who aren't even based in the United States. So how is liability law going to keep Americans safe from open-source tools? And how are you even going to identify who is the party responsible for the harm when many open source tools are modified by many many many different actors? So who is the creator responsible for the harm in question? Kind of difficult to think about how that's going to work out in specifically the reality we're aware of now where some of the overseas models are very likely distilling from US models, right? They're not developing their own technology. If they wind up with a toxic effect out of something they've distilled, how do you get back to root cause on that?

Yes. So, it comes back to this sort of existing tools theory of the case. Your horseshoe theory of politics is a funny analogy, but JD Vance, the vice president, during the campaign in 2024, he specifically said that Lina Khan was one of the few Biden administration officials who he

had a lot of respect for. So when she was the head of the Federal Trade Commission under the Biden administration, she was famous for wanting to go after tech companies and restrict their actions in almost all cases under existing authorities. And what she said in a recent post on X, which she followed up with in an op-ed, quote, "Law enforcers already have the authority to charge companies and their CEOs for creating and releasing dangerous, unvetted, or defective products. We shouldn't let discussions about new legal regimes distract from the fact that there's no AI exemption from the laws already on the books." And frankly, that's pretty consistent with what the Trump administration has been saying, right? The laws on the books can work. But again, I just want to emphasize what the laws on the books might do is punish people who are responsible for bad things happening. And that punishment might be well into the future, right? Meta was found liable for child safety harms that happened 5 years ago, a decade ago, right? That's a long period of time before something actually happens. If you want to drive behavior today and you want to drive effective interventions that are going to increase the safety of the American people from these serious societal risks as the Trump administration describes them, liability is a very, very, very slow tool to do that. And liability also doesn't lead you to any economies of scale or standardization anytime soon. What about liability as a theory of the case is going to drive near-term industry cooperation or best practices sharing? When you talk about liability, it creates a lot of incentives for companies not to share information with the government because anything that they share might help the government go on a fishing expedition to go sue them. That is the question here. If we're currently entering a very dangerous few years where AI capabilities are accelerating very rapidly and our safety capabilities are not keeping pace, I just don't know that liability is the most effective tool to prevent a lot of bad things from happening.