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TEA PARTY IMPACT ON GOP LOOMS LARGE: Tea party-aligned candidates may not have fared well in the latest round of GOP primaries, but the movement continues to shape the 2014 campaign agenda and push Republicans to the right. Many GOP incumbents and candidates backed by party leaders have embraced some of the tea partys top priorities, including repealing the 2010 health law and cutting government spending. Thats made those candidates more able to deflect challenges from the right.

Democrats say House Speaker Thom Tilliss win in North Carolina Tuesday is one measure of how far to the right the GOP has swung. Mr. Tillis, considered the GOPs establishment candidate, has questioned whether climate change is real, said states should establish their own minimum wage instead of the federal government, and has suggested the Department of Education should be eliminated. Janet Hook reports: http://on.wsj.com/1g9CI0l

Rebecca Ballhaus

DAMIAN PALETTAS EARLY HIT: HIGHWAY TRUST FUND IS RUNNING ON FUMES Sometime this summer, the Transportation Department is expected to begin delaying payments to states for road and bridge projects because the Highway Trust Fund is rapidly exhausting its reserves, a prospect that could infuriate governors, mayors and a number of businesses depending on the funds as well as constituents. The funds balance will be just $2 billion at the end of September. Read Damian Palettas full post in Washington Wire about how lawmakers may handle this pothole on the road to midterms:http://on.wsj.com/1sptnsX

WSJ STORIES YOU SHOULDNT MISS RUSSIA SOFTENS TONE: President Vladimir Putin moved to pull Ukraine back from the brink of breakup, calling on separatists to put off a secession vote and saying his troops had withdrawn from the border. But U.S. officials immediately questioned whether Moscow was genuinely committed to stabilizing Ukraine, and the Pentagon said it had seen no evidence to back the claim that Russian troops had been pulled back from the border. Gregory L. White reports: http://on.wsj.com/1lY4D95

YELLENS UPBEAT OUTLOOK: Federal Reserve officials are seeing a long-awaited spring revival in economic growth, marked by increased business hiring and consumer spending. But theyve grown concerned in recent weeks that the housing sector is missing from the upturn. Testifying Wednesday, Chairwoman Janet Yellen said the economy was on track for solid growth, but she highlighted the housing slowdown as a potentially more lasting problem. Jon Hilsenrath and Nick Timiraos report: http://on.wsj.com/1lYgiVq

ENROLLEES ARE PAYING PREMIUMS: Insurance company executives told Congress Wednesday that around 80% to 90% of people who signed up for coverage under the Affordable Care Act paid their first months premium. Their testimony, coming a week after a Republican report concluded that just two-thirds of enrollees had made their first months payment, promises to fuel the partisan fight over the health laws impact. Louise Radnofsky reports: http://on.wsj.com/1lZ6rPc

ALSO IN THE NEWS: The House voted to hold former IRS official Lois Lerner in contempt of Congress for declining to answer lawmakers questions: http://on.wsj.com/1o8hIyM The Center for Public Integrity is out with a study Thursday morning finding conservative third-party groups have spent nearly $9.8 million attacking Republicans this cycle nearly three times what they have spent attacking Democrats http://on.wsj.com/1spvsoxPresident Barack Obamas climate-change push is finding a lukewarm audience: http://on.wsj.com/1o8schN

Compiled by Rebecca Ballhaus

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Capital Journal Daybreak: Tea Party Looms Large | A Pothole Ahead of Midterms | Russian Retreat?