1,700+ Federal AI Contracts: How Fearmongering Fuels a $90B Expansion

As AI developers and researchers push the boundaries of what's possible, they face a parallel challenge: a federal government that is both the biggest investor in AI and a potential source of regulation driven by fear. The tripling of AI contracts to over 1,700 in four years signals massive opportunity, but the accompanying discourse—warning of job displacement, energy consumption, and wealth concentration—echoes past moral panics that stifled innovation. For the AI community, understanding this funding vs. fear dynamic is key to shaping a regulatory framework that fosters progress while addressing legitimate concerns.

In mid-2026, the U.S. federal government's deepening embrace of artificial intelligence has reached a significant milestone, with the number of AI contracts more than tripling from 472 in 2022 to over 1,700, accompanied by a staggering $90 billion in total spending, primarily driven by the Department of Defense. This surge, documented by the Brookings Institution, underscores the government's role as the largest AI spender globally. Yet, as opinion columnist LZ Granderson argues, this expansion is unfolding amid a climate of fearmongering that risks distorting policy, drawing parallels to historical panics over marijuana, solar energy, and electric vehicles.

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The $90 billion figure—most of it concentrated in the DoD—suggests AI is already mission-critical for national security.

Granderson's piece highlights a paradox: while the government pours billions into AI, public discourse is increasingly shaped by anxieties about job displacement, energy-hungry data centers, and wealth concentration. Data centers, as the physical embodiment of AI, are ground zero for these tensions—every leap in model capability demands more square footage and power, fueling local debates over siting and economic benefits. But Granderson's deeper concern is whether AI will be a truly disruptive force for societal good, or merely another tool to enrich the already wealthy, a question rooted in America's checkered history with technology policy.

The historical example of General Motors' EV1 electric car serves as a cautionary tale. GM invested years in developing the EV1, only to abruptly discontinue it in the early 2000s, officially citing production costs. However, lingering suspicions point to oil industry lobbying and campaign donations that may have undermined the car's success. The result: a pioneering technology was shelved, and it took decades for electric vehicles to re-emerge as a viable market. Larry Burns, the former GM VP who killed the EV1, later expressed regret, suggesting that if he could turn back time, they would not have stopped investing. This episode illustrates how fear and entrenched interests can derail technological progress, a pattern Granderson sees repeating with AI.

The federal government's AI spending is not merely a procurement story; it is a regulatory wildcard. When the same government that funds AI at unprecedented levels also holds the power to regulate it, fear-driven narratives can lead to policies that either over-correct or under-protect. The jump from 472 to 1,700+ contracts in just four years signals a rapid institutionalization of AI within defense, health, commerce, and space exploration. The $90 billion figure—most of it concentrated in the DoD—suggests AI is already mission-critical for national security. Yet, public fears about autonomous weapons, surveillance, and algorithmic bias are growing, and history shows that such fears can be weaponized by industries seeking to kill competition or by politicians seeking votes.

Granderson's analogy to marijuana policy is instructive: for decades, 'marihuana' was demonized through fearmongering, leading to harsh criminalization that disproportionately affected minority communities. Similarly, solar energy faced policy rollbacks fueled by fossil fuel interests that exploited public skepticism. In each case, policy was shaped less by scientific evidence and more by orchestrated panic. For AI, the stakes are even higher because the technology is deeply embedded in economic and military infrastructure. A fear-driven clampdown on AI research could cede U.S. leadership to other nations, while insufficient regulation could entrench monopoly power and societal risks.