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AI Regulatory Capture and the $5,000 Promise: Jim Pfaff on Rush to Reason | Sep 14, 2026

Published: September 14, 2026
Network: KLZ 560, Denver
Analysis: Conservative Caucus President Jim Pfaff

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John Rush opened the September 14, 2026 edition of Rush to Reason on KLZ 560 in Denver with the obvious question for a guest just back from Dallas: how was the RNC midterm convention? Conservative Caucus President Jim Pfaff answered with a report on the event, the speakers and the one thing he did not like — President Trump’s promise of $5,000 checks — and then the segment turned to the fight Rush has been having with his own listeners. An industry is asking Washington to regulate it, and Rush said he has never seen that before. Pfaff’s answer was one phrase: AI regulatory capture. What follows is the case he made for it, built on the Progressive Era origins of the Food and Drug Administration, the bank consolidation that followed the 2008 crisis, and the roughly $12,000 in local compute The Conservative Caucus just bought.

Topics Covered

• Dallas: RFK Jr., Scott Bessent, and a Booth Beside the Networks
• The $5,000 Promise and a $40 Trillion Debt
• AI Regulatory Capture: An Industry Asking to Be Regulated
• Local Compute and the Competition the Frontier Labs See Coming
• Heinz, the FDA, and 7,000 Banks Down to 3,000
• Doomerism, China, and the Safety Measures Already There
• Key Takeaways

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Dallas: RFK Jr., Scott Bessent, and a Booth Beside the Networks

Pfaff’s first point about the Republican National Committee’s midterm convention was logistical, and it was a compliment. Party conventions normally take about a year and a half to plan. This one had a few months, and he said he was surprised how well they put that thing on. The complications of a presidential year were absent — no delegate voting, no delegate breakout sessions — but the event itself was still complicated and, in his assessment, very well put together. He singled out the Dallas police, who he called princely after talking with them as he moved around the venue, and noted that the Dallas mayor, who went from Democrat to Republican, spoke from the stage.

The Conservative Caucus was not a bystander. Pfaff said TCC reserved a media booth as significant as the ones CBS, NBC and ABC had, that the TCC logo was visible to everyone walking the floor, and that the booth drew steady traffic from people participating in the convention. He pointed listeners to theconservativecaucus.com, where the interviews, the live segments and the video from the media suite are all posted.

“RFK Jr. gave one of the best speeches that I have ever heard, and everyone should go online and try to find it.”
— Jim Pfaff, President, The Conservative Caucus

He said Kennedy really nailed what’s at stake. The other name he kept returning to was Treasury Secretary Scott Bessent, who he called amazing. The two crossed paths at the Real America’s Voice set: Pfaff was coming off a hit there as Bessent was going in for a remote interview, and Pfaff shook his hand and told him he was the best Treasury secretary ever. He said he really believes that. Donald Trump’s speeches and J.D. Vance’s speech, he added, stirred everyone up positively.

The question he attached to all of it was not about the stage. It was about the calendar: how well will the positive energy from this event track down to November. He is hopeful it does, and called the convention a good start, but said there is just a lot of work to do still.

The $5,000 Promise and a $40 Trillion Debt

Out of everything Pfaff saw in Dallas, one item landed on the negative side of the ledger.

“The only thing that was negative in my mind is Donald Trump promising everyone $5,000.”
— Jim Pfaff, President, The Conservative Caucus

Rush asked whether it can even happen. Pfaff’s answer was procedural first: Congress has to appropriate it. And if Congress does appropriate it, all it is doing is appropriating into more debt, because federal spending has not been brought down to the revenue coming in. He then gave the reason spending has not come down, and it is not this year’s budget fight. The budget still carries money added for the 2008 financial crisis. It still carries money added for COVID. It carries everything Biden added on top of that. In Pfaff’s accounting, that is the deficit.

“We could be running a surplus right now if we only increased spending by the rate of inflation.”
— Jim Pfaff, President, The Conservative Caucus

What he wants instead of checks is a reconciliation bill that cuts massive spending, and he thinks the American people could potentially be positive about it, because it would let the country project a path off $2 trillion deficits. Getting to a trillion, he allowed, would still suck — but it is movement. Rush made the same point from the other direction: a trillion is still 1,000 billions, and people do not really grasp how big a trillion dollars is. Pfaff has made this argument before in TCC’s coverage of the $40 trillion national debt, and he made it again here in a single line.

“There is no reason for us to be $40 trillion in debt.”
— Jim Pfaff, President, The Conservative Caucus

AI Regulatory Capture: An Industry Asking to Be Regulated

Rush moved the conversation to the argument now running between big tech and President Trump, and framed his own position: much of the negativity about AI is coming directly from China on the propaganda end, and he has never seen anything like what the industry is doing now.

“And I’ve never seen, Jim, an industry say regulate us.”
— John Rush, host, Rush to Reason, KLZ 560 Denver

Pfaff answered in one sentence, then spent the rest of the segment defending it.

“What’s going on is an attempt at regulatory capture.”
— Jim Pfaff, President, The Conservative Caucus

He called it a standard, typical expansion of government authority and power, attempted by a group of people who realize they have big competition coming, and he pointed listeners to the piece pinned on his X profile at @JimPfaff. His model of AI regulatory capture has two motives behind it. The first is defensive: the incumbents want to solidify their position, and they know there are risks to the revenue stream. The second is the thing creating that risk, and most people have not heard of it yet.

Local Compute and the Competition the Frontier Labs See Coming

“There is an emergence of the ability for people to purchase local compute and use these open models that are increasingly capable.”
— Jim Pfaff, President, The Conservative Caucus

This is not theory for Pfaff. He told Rush that The Conservative Caucus just made about a $12,000 investment in local compute so that TCC can process its own data without putting it into what the industry calls frontier models. He named the frontier products his own organization is choosing not to send its data to, and explained the distinction: those systems run on massive compute, you use their machines, and your work goes into their pipeline. Local compute does not. You can run even a Chinese open model on your own hardware and no telemetry goes back to China, because the processing happens on the computer in front of you — a point that runs alongside TCC’s reporting on data centers, Chinese money and the AI race.

The competitive threat is in the price. Open models are pretty darn capable, Pfaff said — maybe not at everything the frontier models can do, but a whole lot of it — and they are right on the cusp of providing competition at a very low cost per token. That is the pressure the incumbents are responding to, and it is why he reads the regulatory push as AI regulatory capture rather than a safety campaign. Rush finished the thought himself: let’s get this regulation going so we can regulate our competition as well.

Heinz, the FDA, and 7,000 Banks Down to 3,000

Pfaff’s case for AI regulatory capture rests on two precedents from the last hundred or so years. The first is the origin of the modern regulatory framework itself, which he traces to the Progressive Era and Theodore Roosevelt, and specifically to the Food and Drug Administration. A chemist in the Department of Agriculture — an agency Pfaff noted Abraham Lincoln created — was arguing that industrializing food production in the late nineteenth and early twentieth century required a way to regulate food. At the same time, Heinz was throwing fear, uncertainty and doubt at its ketchup competitors over sodium benzoate, the preservative Heinz did not use and its rivals did.

Pfaff did not claim sodium benzoate was harmless. He said maybe it’s not the best thing, but not everyone was using it, and Heinz wanted to corner the market. Other industries were running the same play. The result is the mechanism he says is being set up again now.

“But that began a process where small actors could not come in because it was too expensive, whereas larger incumbents are able to afford it. And you shut out competition.”
— Jim Pfaff, President, The Conservative Caucus

The second precedent is recent enough that most listeners lived through it. In the 2008 financial crisis, the TARP program delivered a massive bailout to big banks. Small banks got something else: the FDIC said their balance books were out of shape, and they were closed down and sold to mid-sized banks all over the country. Pfaff’s objection is that most of those banks were being responsible — not making new loans, keeping their balance sheets right and stable — and were sold out anyway.

“So we had over 7,000 chartered banks in this country prior to the financial crisis, and now we have about 3,000. This was a way to drive out competition to help larger actors.”
— Jim Pfaff, President, The Conservative Caucus

Doomerism, China, and the Safety Measures Already There

Pfaff’s word for the campaign underneath the regulatory push is doomerism, and he called it all hogwash. His argument against it is not that AI carries no risk but that the safety work is already done and already working. He pointed to a question he asked Jason Calacanis on This Week in Startups, shared at the front of his X profile: tell an AI system to show you how to build and distribute a chemical weapon and it will stop you, and an attempt at something illegal gets reported. Pfaff’s view of that is unambiguous — that is appropriate, by the way. The same applies to self-driving cars: try to steer one into a farmers market to harm people and the safety measures stop you. Rush added the car that pulled itself over this week when it realized it had teenage passengers with a gun. The observation part is creepy, Pfaff granted, but if the measures are limited to real harmful and illegal things, that is what any product maker should do. Build a toaster that burns the house down and there should be liability for it.

What he objects to is the leap from product liability to a regulatory agency, because the agency becomes the venue where large actors declare everyone else unsafe — and he expects that argument to be made next about open source AI — a claim the two of them called a lie on the air. Rush’s own position was that the regulation government wants will slow AI down, which is exactly what China wants.

Pfaff then addressed the listeners on the other side of the argument, the ones Rush said he sometimes argues with on the text line. Pfaff told them he is as concerned about anything like this as they are, and that he is not speaking from a distance: he uses the technology every day, goes back and forth with AI building processes that help TCC run more effectively, and understands the development stack in an intermediate fashion.

“And I’m telling you, AI really is kind of stupid and it really is human-directed.”
— Jim Pfaff, President, The Conservative Caucus

A lot of people are fearful, he said, because they are not using it the way he is, and everyone is telling them how bad it is. His prescription for the conservative movement is the opposite of caution: it is a useful tool, and the movement should be using it a lot more, because it will help conservatives do things more effectively.

“But we should be getting out of this doomerism that is being not only encouraged but funded by China.”
— Jim Pfaff, President, The Conservative Caucus

Rush added Russia and others to the list of funders, on the theory that none of them want to see the United States succeed, and compared the moment to the race to the moon. Pfaff’s last request was about analogies. He is hearing AI compared to atomic weapons a lot, and he rejects it: AI is not inherently evil or inherently dangerous, and what is dangerous is the people. Rush extended it to the internet, which carries both great things and bad things without being evil in and of itself. Pfaff offered the analogy he prefers — a gun is a useful tool for hunting and target practice, and the problem with guns is the people, not the guns — then named the catch in his own comparison: because the lie about guns is already entrenched in our political thinking, we keep transferring it into other areas.

Key Takeaways

1. The convention itself went really well – Planned in a few months instead of the usual year and a half, with no delegate voting to manage. Pfaff said he was surprised how well the party put it on, praised the Dallas police, and noted the Dallas mayor, who switched from Democrat to Republican, spoke. The open question is whether the energy tracks to November.
2. RFK Jr. and Scott Bessent were the standouts – Pfaff called Kennedy’s speech one of the best he has ever heard and told listeners to find it online. He shook Bessent’s hand coming off a Real America’s Voice hit and told him he was the best Treasury secretary ever.
3. The $5,000 checks were the one negative – Congress has to appropriate the money, and appropriating it means more debt, because the budget still carries lines added for the 2008 crisis, COVID and the Biden years. Pfaff wants a reconciliation bill that cuts massive spending instead, moving $2 trillion deficits toward one trillion.
4. The AI regulatory capture case has a trigger – Local compute and open models are increasingly capable and are on the cusp of competing at a very low cost per token. TCC put about $12,000 into local compute so its data never enters a frontier model. That is the revenue risk the incumbents are responding to.
5. The precedents are Heinz and the FDIC – Heinz pushed fear, uncertainty and doubt about sodium benzoate through the early FDA and small food producers could not afford to enter. After 2008, TARP saved the big banks while the FDIC sold off responsible small ones: over 7,000 chartered banks became about 3,000.
6. Doomerism is funded, and the safety work is already done – AI systems already refuse chemical-weapon instructions and report illegal attempts, which Pfaff called appropriate. He uses AI daily, calls it human-directed, and says conservatives should use it more rather than accept a narrative China is funding.

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About The Conservative Caucus:
The Conservative Caucus is a grassroots public policy action organization, formed in 1974. Headed by President Jim Pfaff, the Caucus is committed to advancing free enterprise, limited government, and traditional values.

Originally broadcast Sep 14, 2026 on Rush to Reason with John Rush, KLZ 560 Denver.