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Fears surrounding AI are hitting a fever pitch. Rogue agents are running rampant, and even the industry’s top figures – Amodei, Altman, and Musk – are leading calls for a slowdown in development. With public and investor trust on a precipice, the administration has signaled it’s ready to step in with an AI czar to keep an eye on things. But I worry it won’t be enough.
The next “Hugging Face” could be the final push that spurs a mass investor withdrawal from the very companies propping up the US economy. In my view, the government must get ahead of that curve by establishing a full-fledged Department of AI, rather than leaving it to a single individual. Frankly, the country’s economy could depend on it.
The ongoing AI boom is undoubtedly one of its main drivers. Hundreds of billions of dollars have been poured into the buildout, and not just into AI labs and models, but data centers, semiconductor chips, and so on. Amazon, Meta, Alphabet, and Microsoft alone invested a staggering $400 billion in 2025 – and that was just on data centers.
It’s partly this massive expenditure that’s fueling a US bull run, with the stock market hitting record highs and AI profits piling up. Every dollar poured in weaves the technology’s success and the US economy tighter and tighter together.
While sentiment is positive and the cash is flowing, this is a good thing. Now, however, the mood is turning. We’ve already seen semiconductor stocks have a turbulent ride this year, and public pushback against data centers is also continuing to gain momentum.
Trust took another nosedive when OpenAI’s agents attacked Hugging Face this summer and, in a world-first, a rogue model hacked the Australian Government’s website. It was damaged further still with warnings from Anthropic that AI may pose an “existential” risk to humanity in its recent IPO filing. Few fully understand this technology, and every incident knocks investors’ confidence further. It won’t take much to push them over the edge.
That’s why government intervention is required. Private operators, like Nvidia, may be able to assist in catching rogue AI models with new software – like the OpenShell platform they announced just recently – but there’s only so much a single private company, and “self-regulation,” can do. Just as there’s only so much an individual AI czar can do.
The President is right to move quickly on this – and has already started floating some names, suggesting Jay Clayton would be a good fit – but I’d argue more manpower is an important part of what’s required at this moment.
What we need is a fully staffed government department, with the mandate and reach to enforce accountability and transparency and its own arm’s-length executive agencies. That might seem like a bold call, but AI is now so significant that we need the equivalent of a Department of Energy or Department of Agriculture to oversee how it fits into individual Americans’ lives and monitor development.
A Department of AI, and associated agencies, could play an important role in ensuring safety and accountability before and after a new model goes live. Before, they’d ensure a clear, detailed, risk-based framework is in place to guide experimentation and launch. And after, they’d uncover unscrupulous operators, running audits, assessing governance processes and, where necessary, imposing fines.
Contrary to popular belief, more oversight wouldn’t deter innovation; it would simply ensure it happens in a way that limits risk and margins for error. It would provide a clear framework to experiment within, encouraging creativity and advancement. This is what AI CEOs have been crying out for for some time. They want certainty over what they can and can’t do so they know where they stand, where the boundaries are, and can plan for the future.
We don’t just need more manpower to monitor and enforce regulation, though; we also need it to draft legislative proposals faster. With teams of civil servants that stay close to AI firms and develop a deeper understanding of the process, we’d see more reactive rules and regulations that keep up with the rapid pace of this technology’s advance.
The department’s work would reduce AI risk and make another “Hugging Face” far less likely, bolstering public and investor trust and lowering the chances of a mass investor exodus that brings the US’s bull market to an end.
There’s been a lot of talk about the AI bubble, and what happens if it bursts, with some even predicting we could see a 2008-level crisis. I don’t think they’re far off; if investors pull back en masse, it will have catastrophic consequences for the economy.
That cannot be allowed to come to fruition, and if we’re going to stop it, an AI czar is not enough. We need a Department of AI with the full weight of the government behind it – a hefty organization with the manpower and teeth to reassure markets, give AI firms clarity, and reinstate public trust. And we need it now.
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