Tim Scott wants Fed’s Warsh to address AI data center costs

Senate Banking Committee Chair Tim Scott wants Federal Reserve Chairman Kevin Warsh to talk about artificial intelligence and the data centers powering it when Warsh appears before his committee Wednesday. For everyday investors, the issue sits at the intersection of AI growth, utility bills and public pressure over who pays for the infrastructure behind the boom.

Warsh is scheduled to deliver the Fed’s semiannual monetary policy report to Congress, according to CNBC. That hearing is usually centered on interest rates, inflation and jobs. Scott, a South Carolina Republican, said on CNBC’s Squawk Box that he wants the conversation to stretch beyond the Fed’s standard lane.

Scott pointed first to the Fed’s dual mandate, the central bank’s legal goals of price stability and maximum employment. In plain English, that means the Fed is supposed to keep inflation under control while supporting a strong labor market. Scott said those goals remain important, but added that lawmakers should examine AI’s local impact, especially in South Carolina.

“The dual mandate of the Fed is really important: price stability employment, I also think we have to drill into the artificial intelligence conversation in South Carolina,” Scott said on CNBC. “The real question we should ask is how do we make sure that these data centers pay their own way as it relates to electricity and water use.”

Why data centers are in the hearing mix

Data centers are the physical facilities that house servers and networking equipment. AI systems require large amounts of computing power, and that demand has helped drive interest in building more of these facilities. Scott’s comments focused on the local strain those projects can create, especially around power and water.

CNBC reported that some parties in South Carolina want to ban data centers tied to AI growth. The network also reported that data center moratoriums are gaining support in parts of the country as voters push back against higher utility bills.

That tension is increasingly political: communities may want the economic activity linked to technology investment, but residents can object if they believe they are absorbing costs through electricity bills or water demand. Scott framed the issue as a need to solve local problems while keeping the U.S. competitive in AI.

“When you zoom out, the most important question is who wins the future? Is it China or is it America? Artificial intelligence will be that which threads that needle,” Scott said on CNBC. “I want to make sure that we are on the right side of history, and frankly we have to solve the problems at home so that we can win the issue as a country.”

Warsh is appearing before the House Financial Services Committee on Tuesday before heading to Scott’s Senate Banking Committee on Wednesday, CNBC reported. Wednesday’s hearing will be Warsh’s first appearance before the Senate panel since becoming Fed chairman.

This story draws on original reporting from CNBC.