Fears around AI have reached a fever pitch. Rogue agents are proliferating, and even leading figures in the industry—Amodei, Altman, and Musk—have called for a slowdown in development. With public and investor trust on a precipice, the administration has signaled it’s ready to appoint an AI czar to oversee developments. But that alone won’t be enough.
The next “Hugging Face” incident could trigger a mass investor withdrawal from the companies propping up the U.S. economy. The government must get ahead of that risk by establishing a full-fledged Department of AI rather than relying on a single individual. Frankly, the country’s economy could depend on it.
The ongoing AI boom is a major driver of economic growth. Hundreds of billions have been poured into the buildout—not just into AI labs and models but into data centers, semiconductor chips, and related infrastructure. Amazon, Meta, Alphabet, and Microsoft alone invested a staggering $400 billion in 2025—and that was just on data centers.
This massive expenditure is fueling a U.S. bull run, with the stock market hitting record highs and AI profits piling up. Every dollar invested weaves the technology’s success ever more tightly with the broader economy.
While sentiment and capital flows have been positive, the mood is shifting. Semiconductor stocks have had a turbulent ride this year, and public pushback against data centers is continuing to gain momentum.
Trust suffered another blow 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 by 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 chips away at investors’ confidence. It won’t take much to push them over the edge.
That’s why government intervention is required. Private operators, like Nvidia, may help catch rogue AI models with new software—such as the OpenShell platform they announced recently—but there’s only so much a single private company and “self-regulation” can do. An individual AI czar can’t do it alone either.
The President is right to move quickly and has already floated names, suggesting Jay Clayton would be a good fit, but more manpower is essential at this moment.
What we need is a fully staffed government department with the mandate and reach to enforce accountability and transparency, supported by arm’s-length executive agencies. It may sound bold, but AI is now significant enough to warrant the equivalent of a Department of Energy or Department of Agriculture to oversee how it affects individual Americans’ lives and to monitor development.
A Department of AI and associated agencies could ensure safety and accountability both before and after new models go live. Before launch, they would enforce a clear, detailed, risk-based framework to guide experimentation and deployment. After launch, they would uncover unscrupulous operators, run audits, assess governance processes and, where necessary, impose fines.
Contrary to popular belief, more oversight wouldn’t deter innovation; it would steer it to limit risks and reduce margins for error. A clear regulatory framework encourages creativity and advancement by providing certainty about permissible actions. This is what many AI CEOs have been asking for: clarity on boundaries so they can plan for the future.
We also need more staff to draft legislative proposals faster. Civil servants who stay close to AI firms and develop a deep understanding of their processes would enable more responsive rules and regulations that keep pace with the rapid advance of the technology.
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 could end the U.S. bull market.
There’s been much talk about an AI bubble and what a burst might bring, with some predicting a crisis on the scale of 2008. Those concerns aren’t far-fetched; if investors withdraw en masse, the consequences for the economy could be catastrophic.
That cannot be allowed to happen. An AI czar is not enough. We need a Department of AI with the full weight of the government behind it—a substantial organization with the manpower and teeth to reassure markets, give AI firms clarity, and restore public trust. And we need it now.
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