As far as I can tell, it started with this Newsforge story (Newsforge is also part of OSDN, Slashdot's corporate parent). The Newsforge story was excerpted and copied by an Australian newspaper, and from there, it was off and spreading. The headline chosen, "Washington State Congressman attempts to outlaw GPL", is not particularly accurate, but it did a great job at stirring up outrage. Outlaw the GPL! Over my dead keyboard!
From there it really started making the rounds. It was repeatedly submitted to Slashdot with all sorts of flaming, incorrect commentary - in fact, after reading a dozen different submissions, I didn't think any of them were even close to accurate. I picked one and posted it, trying to do my best to a) provide an accurate headline and b) provide an accurate summary of the issue at stake in a few sentences. To recap again: when the Federal government creates computer code (or any copyrightable work) directly, it gets no copyright whatsoever and the work is true public domain (quirk of the U.S. copyright laws - the 50 states, corporations, individuals, and other legal entities all get copyrights automatically, but the Federal government does not). If you want to copy, reproduce, or sell an .mp3 of the U.S. Congress singing "God Bless America" after September 11, go right ahead: there is no copyright on it whatsoever. (Actually, the song itself is still under copyright, but Congress' performance of it wouldn't be...)
However, when the Federal government hires a non-employee to create code or copyrighted works, there is no clear rule regarding the copyright status of the work. Sometimes the contract calls for rights to the work to be assigned to the Federal government (the Feds don't get original copyrights, but if someone else gets an original copyright, the Feds can acquire it). Sometimes the contractor keeps the copyright and gets to do whatever they want with it. Sometimes the contract doesn't specify. Note that this is NOT a BSD-vs.-GPL dispute, not by a long shot. Very little code financed by the Federal government is ever licensed under either of these two licenses - the choice is basically agency-proprietary (the Federal agency asked for the rights in the contract, and kept them) or company-proprietary (the agency didn't ask for the rights, and the contractor kept them).
And most of the time it doesn't matter. I've written code for the Federal government as both a contractor and an employee, and 99% of it was so specific and customized that it would be of use to no one else, regardless of its licensing or copyright status. Probably the majority of code written for the Federal government falls into that category - internal use software for very specific needs.
But some of it is undoubtedly useful. Some major projects funded by the government in conjunction with academia have escaped from licensing purgatory, typically through the efforts of the researchers working on them who approach the issue from an academic freedom viewpoint and want to see their work widely adopted. GRASS is one major one that I know of. A commenter pointed out ADA as an example. For code which is useful to others, either a BSD-like or GPL-like license would be truly beneficial and easily defensible as a public policy choice. In the non-code world, the government makes choices like that all the time - it might choose to purchase a particular piece of land and commit to making it available to everyone forever by declaring it a National Park and committing to maintain it, a GPL-like philosophy; alternately, it might choose to just dump a particular piece of property on the market, putting it up for auction and letting the purchaser do what he wills with it, a BSD-like philosophy. Either of these two options might be optimal; but paying for code which ends up remaining proprietary is like buying a new stadium to benefit a very specific corporation which owns a very specific sports team: the type of use of public funds which is generally seen as sleazy and the opposite of good governance.
Either of the first two choices can be appropriate in certain situations. What does not seem appropriate is paying for proprietary code, although this is generally what happens when the government contracts for code. Since the government has the ability to provide a benefit to the public (open code) at essentially zero cost, it should do so. An example which has struck me several times over the past few years: every airport in the world has the same problem, coordinating planes taking off and landing and keeping them from running into each other. Yet each nation (and often each airport) solves the problem over and over, paying heavily for custom-designed, one-shot software development. Imagine if the world's airports could simply install GNU-AirTrafficControl 2.7, and have a complete, working, bug-free and cost-free air traffic control system. It would cost every nation less to do it this way, but it would also make a lot less money for the consultants retained to develop these systems.
But leave off the advocacy for moment - I was following the story itself. As noted above, the outcry has prompted many of the other Representatives who originally signed the letter to reconsider. The AP story even suggests that some of the signatories were actively misled - that the letter they thought they were signing didn't mention the GPL at all. However it actually played out, some good has been done.
That's good. What's not so good is that much of the outcry was probably generated by stories titled "Washington State Congressman attempts to outlaw GPL". The right outcome occurred, but for the wrong reasons and in the wrong manner. I am left wondering whether the community would have made the same sort of response on this issue if every story that had been posted about it was 100% accurate and non-inflammatory.
 If you're not familiar with the BSD-like and GPL-like classes of software licenses, this won't make a lot of sense to you, so please read up if necessary.