Texas Gov Gets Chance to Confront Trump
on Medicaid and Data Centers at GOP Rally
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Capitol Inside
September 2, 2026
Governor Greg Abbott vowed on Wednesday to step up a fight for nearly $10 million in Medicaid funding for Texas hospitals that President Donald Trump is refusing to release amid suspicions of fraud that the state's top leader ordered officials to investigate earlier this year.
But the Texas governor did not reveal whether he would confront the president in person on the Medicaid funding blockade when he gets the opportunity next week at a rally that Trump has the GOP staging in Dallas next week as a showcase for his agenda and candidates he's backing this fall.
After calling for probes into Medicaid piracy in a letter to state agencies and officials in January, Abbott intervened this week in the standoff with the Trump administration on the funding that it's blocking in a move that could cost Texas hospitals tens of millions of dollars every day the money on which they depend is withheld.
The two-day event that the Republican National Committee is billing as the Great American Comeback Midterm convention would also give the Texas governor a chance to press the president on his crusade for data centers that Texans in rural areas that are heavily Republican stringently oppose. Abbott had been the champion for data centers that develop and manage artificial intelligence before he and other Republicans encountered a ferocious public backlash over their proliferation and heavy consumption of water and other resources in places they've popped up around the Lone Star State.
Abbott has changed his tune dramatically on the AI industry in recent months - portraying himself now as a watchdog who's cracking down on data centers' previously unmitigated growth with a pause on electric connections from ERCOT for those that are located in parts of the state that rely on power from the independent Texas grid. Abbott and the Republican nominee for the U.S. Senate in Texas - state attorney general Ken Paxton - have been pounded by Democratic opponents for reaping hundreds of thousands of dollars from data center executives in campaign contributions when they'd failed to anticipate the furor they would spark in the months before the midterm election.
The governor remains a slight favorite over Democratic challenger Gina Hinojosa in the competition for the state's top political post that he's seeking for a fourth time in 2026. But Abbott's lead in the polling began to shrink during the summer as data centers emerged as the most explosive issue for the general election in Texas where the Republicans who've controlled the state for three decades had been AI industry cheerleaders or ambivalent about their rapid growth here until recent months.
Abbott runs the risk of offending a revenge-minded president if he seeks to buttonhole Trump in Dallas on data centers or the Medicaid funding that his administration is holding hostage in a move that could cost Texas hospitals as much as $27 million a day in funding they thought they'd receive after Congress approved the outlays. The governor voiced no concerns on a possible loss of Medicaid funds in Texas when the Trump administration pushed successfully for a massive reduction in appropriations for the federal program for seniors and children from poor families in the Big Beautiful Bill that the Republicans here saluted last year.
Trump already has declared that Texas and other states that have joined the anti-data center brigade are making mistakes that will cost them dearly. Trump said this week that the people who oppose data center development in rural areas can expect to be "backwards and poor" in the future as a product of their stubbornness. Abbott will be hoping that Trump doesn't call him out for reversing course with his belated defiance on data centers and Medicaid and other potential disputes that crop up between now and next Wednesday when the RNC's rally kicks off at the American Airlines Center in downtown Dallas on the first of two days.
Paxton might not expect any blowback from the president on data centers despite the release last week of a four-point plan to reign them in. The Paxton proposal embraced the Abbott plan that key players in the AI industry have endorsed as a fair compromise. The Texas Senate nominee's plan also endorsed a piece of legislation that hasn't received a hearing or vote since it was filed in the U.S. Senate early this year by a conservative Republican from the south.
But the Paxton data center plan's other two points called for the possibility of criminal liability for the use of funding from communist China to build and to run the AI facilities and the regulation of AI chatbots that he says the Chinese use to spy on Americans. Paxton may pass on the chance to lobby Trump on data centers or other issues on which they may not be in complete sync at the event in Dallas a week from now.
Paxton has envisioned the Dallas rally to be a launching pad to a victory in November in a U.S. Senate race in which he's been trailing Democratic foe James Talarico by almost three points on average throughout most of the summer. But the so-called midterm convention has massive potential to backfire in ways that hurt Paxton, Abbott and other Republicans at a time when Trump is historically unpopular and making no attempt to turn record low approval marks around with time in rapidly diminishing supply ahead of the midterm vote. The governor must decide if he's going to take the fights on data centers and Medicaid to Trump in Dallas or stay mum in Dallas on those highly contentious issues to avoid the president's wrath.
more to come ...
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