As reported in the last Watcher, on April 28 the Senate passed a four-year continuation of the now-expired Internet tax moratorium. Disagreements with the House make passage of the ban unlikely.

Gross domestic product (GDP) rose by a 4.2 percent annual rate in the first quarter, according to the Bureau of Economic Analysis. This is about the same as the 4.1 percent rate from the last quarter of 2003, and shows the economy growing at a steady, if not exceptionally strong, rate. However, forecasters had expected growth to come in at a stronger 5 percent rate.

"Paygo" rules, once a little-known budget technicality, are now proving to be the main impediment in reaching a budget resolution for FY 2005, which begins on October 1, 2004.