AI and data center policy take center stage in 2026 midterms

The AI infrastructure backlash

The 2026 midterm elections are serving as a primary testing ground for the political consequences of the AI boom. Beyond the usual partisan battles, candidates in several key states are being forced to take firm positions on the expansion of data centers. These massive facilities are essential for training large AI models but have faced increasing pushback from local communities.

In Ohio, the race for a Senate seat has become a flashpoint for this debate. Republican candidate Jon Husted is facing a challenge from former Senator Sherrod Brown, who has criticized Husted for his previous support of data center development. Husted has since stated that the issue should be left to individual communities and no longer supports offering tax incentives for new construction.

The stakes for the tech industry are high in these regional races. Senate Republicans have warned AI labs that if Husted loses and data centers are blamed, politicians nationwide will become wary of approving future projects. This suggests that the success of the AI infrastructure rollout may depend on how these specific local races play out.

Musk and the Texas Senate race

One of the most high-profile races involves a Texas Senate seat where Elon Musk has made a significant political move. Musk has donated at least $158 million to a pro-Paxton super PAC to support Republican Attorney General Ken Paxton. This effort follows a primary where Paxton secured the endorsement of Donald Trump over Senator John Cornyn.

The race is a critical test of Musk's political influence and his ability to shape the GOP majority. While Musk has been vocal on social media against the Democratic candidate, James Talarico, the financial backing is the most direct form of intervention. Cornyn has warned that a Paxton victory would leave the party with an officeholder burdened by various personal and legal scandals.

The outcome in Texas will be a major indicator of how much weight Silicon Valley's wealthiest figures can carry in national politics. With no Democrat winning a statewide election in Texas since 1994, the seat is a key target for maintaining the current Republican power structure. The race remains a toss-up according to current polling data.

Democratic calls for moratoriums

In several other states, Democratic candidates are taking a more aggressive stance against the rapid expansion of AI infrastructure. In Michigan, candidate Abdul El-Sayed has called for the government to take equity stakes in AI companies. He also wants to force tech giants like Microsoft to divest from companies like OpenAI and Anthropic.

Similar sentiments are appearing in Wisconsin, where candidate Rebecca Cooke is advocating for a federal moratorium on data center development. She has used the issue to attack Republican candidate Derrick Van Orden, who has countered by accusing her of working too closely with tech groups. These candidates are framing the AI boom as a matter of public equity and local control.

These policy contrasts are becoming a standard part of the midterm playbook. In Michigan's 7th District, the debate centers on a proposed $1 billion hyperscale data center near Mason. While the Democratic candidate supports a moratorium, the Republican candidate argues that local officials should have the final say on such projects.

California's billionaire tax

While the AI infrastructure debate happens across the country, California is focusing on the personal wealth generated by the tech boom. A major ballot initiative proposes a one-time 5% tax on Californians with more than $1 billion in wealth. This measure has drawn significant attention from both labor unions and high-profile political figures like Bernie Sanders and Ro Khanna.

The opposition to the tax is equally prominent, featuring Silicon Valley elites such as Google cofounder Sergey Brin. Governor Gavin Newsom, who is a potential candidate for the 2028 presidency, also opposes the measure. The initiative is complex because there are three intertwined proposals that could effectively nullify the tax depending on the final vote count.

Because California has a large population and a complex voting system, the results of this initiative may take days or even weeks to finalize. The outcome will provide a clear signal regarding the public's appetite for taxing the massive wealth accumulated during the recent tech expansion. Early polls show a narrow edge for those who oppose the tax.