President Trump is slapping tariffs on America in a quixotic bid to revive traditional manufacturing. Meanwhile, private investment is pouring into data centers, where the AI economy is being born - because nothing says "Make America Great Again" like a warehouse full of servers humming in Virginia.
The U.S. is the undisputed epicenter of a global data-center investment boom, supporting the internet, cloud computing, and training ever-more-capable AI models. Spending on these digital fortresses is growing exponentially, largely fueled by hyperscalers like Amazon, Microsoft, Google, Meta, Oracle, and OpenAI. The first four of these digital titans alone dropped $425 billion on data centers last year, a figure expected to top $600 billion this year. That's a lot of money for buildings that mostly just sit there and compute.
Surging capital investment in data centers and AI has helped propel the stock market to new heights, and for now, it's making America the world's foremost computing superpower - the pace car in a race against China to master AI. More than 4,000 data centers (almost 40 percent of the world total) are located here, compared to just 368 in China. Take that, Beijing.
But the U.S. digital gold rush is running into a groundswell of local resistance. In Virginia, which has the nation's biggest concentration of data centers (570), voters are having second thoughts. Three years ago, 69 percent said they were comfortable with new data centers in their community. That number has since dropped to 35 percent, with 59 percent voicing discomfort. Prince William County has nixed plans for a 1,700-acre campus near the Manassas Civil War battlefield, which would have hosted dozens of data centers. Apparently, data centers are even less popular than reenactments of the Battle of Bull Run.
Maine recently became the first state to pause building large data centers pending a study of its energy needs. And Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) are pushing a bill in Washington to impose a national moratorium on construction. Nothing brings people together like the threat of higher electricity bills.
The backlash springs from three main sources. First and most pervasive is the fear of soaring electricity bills. Data centers have a voracious appetite for power, putting pressure on utilities to generate more and upgrade local grids. Residents worry it portends higher monthly bills, even as energy costs already are rising faster than inflation. The centers also consume large volumes of water to cool servers, which could mean shortages and higher water bills - making them especially controversial in the desert West.
Second, a majority of Americans say they're anxious about losing their jobs to AI. Such fears may be premature, but they cannot be airily dismissed. And while initially welcomed for creating construction jobs and generating substantial property tax revenues, data centers essentially are warehouses crammed with servers - modest job creators at best. An average facility might employ around 200 people. That's not exactly the manufacturing renaissance Trump promised.
Third, progressive opposition is hardening. Climate activists oppose building more natural gas pipelines and plants to run data centers. The populist left takes a typically dark view, warning that AI will further enrich "tech oligarchs" while inflicting a job apocalypse on working Americans.
On the political fringes, anti-AI extremists who prophesy "human extinction" are resorting to violence. Federal authorities last week charged a suspect in the firebombing of OpenAI CEO Sam Altman's house in San Francisco. That followed gunfire sprayed into the house of an Indiana city councilman who had voted to greenlight a data center. Because nothing says "stop the machines" like arson.
U.S. political leaders should reject a witless "yes or no" debate on data centers. Instead, they should back community efforts to cut better deals with tech investors and devise a national policy framework for developing AI along ethical and democratic lines.
The first imperative is protecting ratepayers. Most big tech firms already are pledging to cover the costs of new power generation. To make sure they pay their way, states can follow Virginia's example and create a separate rate class for large consumers of power like hyperscalers. Communities should stop dangling sales tax abatements to lure data centers. They also should negotiate "corporate citizenship" compacts that require investors to be transparent about resource needs and job creation, work to reduce noise, and create "earn and learn" partnerships with community schools and businesses to help local workers learn how to use AI.
Center-left leaders should give AI doomers a wide berth and affirm America's national interest in pioneering high-tech innovation. "I refuse to hand the lead in AI to China," declared Sen. John Fetterman (D-Pa.) in opposing the moratorium proposed by Sanders and Ocasio-Cortez. They should also challenge climate activists to acknowledge that America will need more natural gas and nuclear power, as well as renewables, to supply abundant energy and steadily reduce carbon emissions.
Like the Clinton-Gore administration, which deftly midwifed the birth of the internet in the 1990s, Democrats should face the future with hope, not fear. They should work to turn today's disruptive technological changes into new waves of opportunity for all Americans. Or, at the very least, not let the power grid collapse.