On Thursday, Elon Musk reacted to Y Combinator CEO Garry Tan's post, which criticized proposed legislation from Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) that would halt major AI data center construction.
Musk's Brief Response Fuels AI Infrastructure Debate
Musk reposted Tan's comments on X with a terse "hmm," signaling interest as Silicon Valley leaders push back against the AI Data Center Moratorium Act introduced in March 2026.
The legislation would temporarily block new AI data center projects exceeding 20 megawatts until Congress implements broader AI oversight, including environmental protections, labor standards, mandatory union labor requirements and semiconductor export restrictions.
Garry Tan Warns AI Moratorium Could Hurt American Jobs
Tan argued the bill threatens one of the country's most significant economic growth engines.
"The people who say they want American jobs are trying to block the biggest job creation engine since the interstate highway system," Tan wrote.
Citing Brookings and PwC research, Tan said that data centers generate thousands of local jobs while creating broader economic ecosystems through construction, power infrastructure and supplier networks.
He pointed to PwC's 2025 report showing data centers supported 4.7 million U.S. jobs in 2023, with each direct job creating a 7.5x multiplier effect across related industries.
Rising Local Resistance To AI Data Centers Intensifies National Debate
Despite industry support, opposition has grown in several communities over concerns about soaring energy costs, environmental strain and large-scale development.
Ocasio-Cortez previously noted some nearby utility customers experienced electric bill increases as high as 267%, while large AI facilities can consume power equivalent to roughly 100,000 households.
Recent backlash in Missouri, Texas and Michigan underscores mounting public frustration, with some residents removing local officials who approved large projects.
Tan called such restrictions "knee jerk and shortsighted," warning they could undermine startups, destroy jobs and weaken U.S. competitiveness in the global AI race.
Sanders and AOC did not immediately respond to Benzinga's request for comments.
Elon Musk's Space AI Data Center Push
Currently, Musk, through SpaceX, is pursuing space-based AI data centers via specialized satellite networks to meet growing AI compute demands.
Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) CEO Sundar Pichai has predicted that orbital AI infrastructure could become the standard within a decade.
Cathie Wood also believes such a shift could significantly benefit SpaceX.
OpenAI CEO Sam Altman, however, has dismissed the concept for now, citing extreme costs and major logistical hurdles.
In February, Amazon.com, Inc. (NASDAQ:AMZN) Web Services CEO Matt Garman also said orbital data centers are still economically unviable and operationally impractical.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo Courtesy: Frederic Legrand – COMEO on Shutterstock.com
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