By MICHAEL FALCONE ( @michaelpfalcone ) and AMY WALTER ( @amyewalter )

NOTABLES:

• OBAMA SIGNALS SUPPORT FOR GUN CONTROL BILL: The White House yesterday indicated President Obama would support legislation that would reinstate the ban on certain types of semi-automatic rifles-known as "the assault weapons ban" - and may support other efforts, such as a proposal to ban high-capacity magazines, in the wake of the deadly massacre in Newtown, Conn, ABC's Jake Tapper and Mary Bruce report. "He is actively supportive of, for example, Senator Feinstein's stated intent to revive a piece of legislation that would reinstate the assault weapons ban," White House press secretary Jay Carney told reporters, publicly backing for the first time legislation Feinstein plans to introduce. The White House had previously been reluctant to publicly named any specific action it might support in an effort to prevent future massacres. http://abcn.ws/ULPlnt

• CLIFF HANGER: ABC's Jonathan Karl reports for "World News" on the latest fiscal-cliff offers, with House Speaker John Boehner agreeing to raise taxes on Americans making over $1 million per year. WATCH: http://abcn.ws/TYT6pq

• DEMS, SOME REPUBLICANS AREN'T BUYING BOEHNER'S 'PLAN B': More from ABC's Devin Dwyer, John Parkinson, and Sunlen Miller: The backup plan received a chilly response from Democrats and some Republicans who said it could not pass. "Speaker Boehner should focus his energy on forging a large-scale deficit reduction agreement," said Senate Majority Leader Harry Reid. "It would be a shame if Republicans abandoned productive negotiations due to pressure from the Tea Party, as they have time and again." Several congressional Republicans suggested they would not vote for any plan that allows tax rates to rise. Boehner's "plan B" would let the top marginal tax bracket increase from 35 to 39.6 percent next year. "I don't want to raise taxes on anybody and I didn't come here to raise taxes or increase spending," Rep. Marsha Blackburn of Tennessee said after meeting with Boehner. http://abcn.ws/XGsjzm

• DEMOCRATIC SENATOR SAYS HE CAN BRING NRA, CONGRESS TOGETHER: In the latest installment of ABC/Yahoo! Power Players series "Top Line," West Virginia Sen. Joe Manchin, a pro-gun Democrat, tells ABC's Amy Walter and Rick Klein that the Newtown, Conn., shooting " it changed everything, it changed me, it changed all of us." Manchin says that in pushing gun-control legislation through Congress, "We need to have the NRA at the table, you cannot have meaningful changes unless you understand all sides of the issue." Manchin says he believes he can bring the NRA together with gun-control advocates in his party. WATCH: http://yhoo.it/VPswyJ

THE NOTE:

The one-step-forward, two-steps-back negotiating game between the White House and Republican leaders on Capitol Hill continued on Tuesday - and this time they seemed to take a big leap backward.

After hopeful signs emerged from talks between House Speaker John Boehner and President Obama earlier this week, yesterday brought fresh reasons for pessimism that both sides were on the same page.

As ABC's Jonathan Karl reports, Speaker Boehner appeared to be shifting to "Plan B," which includes extending the Bush-era tax cuts for those making less than $1 million a year (while letting them go up on those above that income level) as well as an extension of both the estate tax cut and the current 15 percent tax on capital gains and dividends.

"It increasingly looks like this will be the quasi solution to the fiscal cliff," Karl notes. "But it will leave major unfinished business - and great economic uncertainty - for early in the New Year."

That unfinished business includes: what to do about the debt ceiling, unemployment benefits, deep cuts to the defense budget and other programs and Medicare payments to doctors.

The political outlook: If Boehner's "Plan B" bill wins approval in the House, Sen. Harry Reid, D-Nev., said Democrats in the Senate would move to amend it - their biggest goal is setting a lower income bar for higher tax rates - and return it to the House.

House Democratic Leader Nancy Pelosi is reportedly "leaning hard on House Democrats to stay united in their opposition" to Boehner's latest proposal, as The New York Times Jonathan Weisman reports "If she succeeds, the speaker could afford about only 18 Republican defections, fewer than he has had on any major fiscal vote since Republicans took control two years ago." http://nyti.ms/TYTrbD

Meanwhile, as the country teeters on the edge of the fiscal cliff, ABC's Jake Tapper and Devin Dwyer report that President Obama will seek to offer signs of action on the issue that has gripped the country in the wake of last week's Connecticut school shooting.

The president plans will announce today that Vice President Joe Biden will spearhead an interagency process to formulate policies in the aftermath of the Newtown tragedy. According to Tapper, Obama "is not expected to announce major policy decisions, but rather to lay out the process by which his administration will move forward."

ABC's Sunlen Miller and John Parkinson contributed reporting.

WHY BIDEN? More reporting from Jake Tapper: "Biden's new role is rooted in his experience writing and shepherding into law the 1994 Crime Bill and his familiarity with such issues from his time chairing the Senate Judiciary Committee. The 1994 Crime Bill included the ban on certain types of semi-automatic rifles (better known as the "assault weapons ban") and new classes of people banned from owning or possessing firearms, in addition to expanding the federal death penalty and the Violence Against Women Act."

WHAT ABOUT THE GOP? A Republican strategist weighs in on today's announcement by Obama: "Given the way that Newtown so deeply affected Americans of all stripes, it's somewhat surprising that the GOP is going to completely cede the issue to the president. At minimum, they should convene a panel, special Committee etc to look into what's causing these tragedies and offer solutions. Doing nothing won't play well with an electorate wanting answers and change."

CLIFF MECHANICS - HOUSE TO VOTE ON 'PLAN B' THIS WEEK? ABC'S John Parkinson reports: The text of the House amendments to the Senate amendment to H.J.Res. 66, which will be the vehicle for the House tax proposal, is now online at the Rules Committee website. This sets up a vote on Thursday as long as Republicans can whip 218 votes.

NOTE IT!

ABC's RICK KLEIN: Plan B is now ahead of Plan A in line. But where's the plan for getting the votes? House Speaker John Boehner's gambit is either a brilliant technique aimed at strengthening his negotiating position, or a foolhardy scheme that will demonstrate divisions in his own caucus. He's putting his members on record (or, at least, trying to) in favor of tax rates going up for high-income earners - precisely the kind of vote almost every Republican came to Congress to try to avoid. If he gets it, he shows his caucus' resolve in the face of pressure from the White House. If he doesn't, Plan A options will be scrambled, perhaps too late to leave time for Plan C.

THE BUZZ:

with ABC's Chris Good ( @c_good)

BENGHAZI REPORT: 'SYSTEMIC FAILURE' BY STATE DEPT. ABC's Dana Hughes reports: The State Department has released its independent, internal investigation into the Sept. 11 attack on the U.S. consulate in Benghazi, concluding the attack was the result of the State Department's "systematic failure" in addressing the security needs of the consulate. The 39-page unclassified report, released Monday, is highly critical of decisions made by senior officials from the Diplomatic Security and Near East Affairs bureaus as demonstrating "a lack of proactive leadership and management ability in their responses to security concerns posed by the Special Mission Benghazi, given the deteriorating threat environment and the lack of reliable host government protection." … The investigation was conducted by the Accountability Review Board appointed by Secretary of State Hillary Clinton in late September. The five members spent the last two months interviewing over 100 officials and pouring over thousands of documents and watching hours of video, before issuing conclusions and recommendations to Clinton about what happened before the attack and how another attack may be prevented. http://abcn.ws/V68jZo

READ THE FULL REPORT: http://1.usa.gov/ZO5TBV

THE QUESTION OF RESPONSIBILITY. More from ABC's Dana Hughes: The report clearly places the blame for the deaths of Ambassador Stevens and the other three Americans that night on the terrorists. "Through the course of its inquiry, the Board interviewed over 100 individuals, reviewed thousands of pages of documents, and viewed hours of video footage. On the basis of its comprehensive review of this information, the Board remains fully convinced that responsibility for the tragic loss of life, injuries, and damage to U.S. facilities and property rests solely and completely with the terrorists who perpetrated the attack," the report states. And while the report repeatedly cites a lack of leadership and planning from several senior officials in the lead up to the attack, it does not blame anyone explicitly saying that the board "did not find reasonable cause to determine that any individual U.S. government employee breached his or her duty."

CLINTON'S RESPONSE. Hillary Clinton, still recovering from her recent concussion, offered a response to the report Tuesday night, ABC's Dana Hughes reports: In two eight page cover letters to the House Foreign Affairs and Senate Foreign Relations committees, Secretary Clinton said that she accepted the report's conclusions in their entirety. "The Accountability Review Board report provides a clear-eyed look at serious, systemic challenges that we have already begun to fix," said Clinton. "I am grateful for its recommendations for how we can reduce the chances of this kind of tragedy happening again. I accept every one of them." Clinton said she has already established a task force, that met for the first time today, which will make sure that the board's findings are implemented "quickly and completely." http://abcn.ws/RDNnK8

MILITIA SECURITY INADEQUATE. More from ABC's Dana Hughes: Though the state department has repeatedly pointed to the local militia in Benghazi as being an integral part of the security plan at the consulate, in reality the militia proved inadequate and ineffective, according the report's findings. http://abcn.ws/V68jZo

INOUYE TO LIE IN STATE TOMORROW. ABC's Sunlen Miller reports that Sen. Daniel Inouye, the Hawaii Democrat who died on Monday at 88, will lie in state in the U.S. Capitol Rotunda for public viewing on Thursday, December 20, 2012. http://abcn.ws/ZiuoYQ

SENATE PAYS TRIBUTE. More from ABC's Sunlen Miller: One day after his passing, Sen. Inouye's desk in the US Senate was draped in a black cloth, Hawaiian ceremonial kukui nut beads and adorned with a vase full of white roses in tribute. The day started with a moment of silence for the Senator and the Senate Chaplain Barry Black prayed for the "beauty of his well lived life." Many described the late Senator as "humble" some noting that he didn't even hang pictures of himself nor his accomplishments over the years in his Senate office - a rarity among Senate personalities and egos. "He was exactly the opposite of all the caricature pictures people have of congress today, and particularly about the rabid partisanship and personal incivility," Sen. Lieberman, I-Conn., said, "Dan was a great gentleman, and the most civil of people, the kindest and most decent of people." http://abcn.ws/ZiuoYQ

OBAMA IS TIME'S PERSON OF THE YEAR. Time's Michael Scherer writes the story: Twenty-seven years after driving from New York City to Chicago in a $2,000 Honda Civic for a job that probably wouldn't amount to much, Barack Obama, in better shape but with grayer hair, stood in the presidential suite on the top floor of the Fairmont Millennium Park hotel as flat screens announced his re-election as President of the United States. The networks called Ohio earlier than predicted, so his aides had to hightail it down the hall to join his family and friends. They encountered a room of high fives and fist pumps, hugs and relief. … Obama says he long ago decided that he should not compare himself to Lincoln. But he nonetheless begins his second term with a better sense of what is possible in his job as well as what is not, something Lincoln struggled with as well. "You do understand that as President of the United States, the amount of power you have is overstated in some ways," Obama says. "But what you do have the capacity to do is to set a direction." He has earned the right to set that direction and has learned from experience how to move the country. After four of the most challenging years in the nation's history, his chance to leave office as a great President who was able to face crises and build a new majority coalition remains within reach. http://ti.me/TYR0WG

GUN CONTROL FOLLOWS OBAMA FROM CHICAGO. Bloomberg's John McCormick writes: "The president's hometown and home state are on the front line of the struggle to defend some of the same gun-control measures he's been urged to support … Just last week, a federal appeals court in Chicago struck down an Illinois law banning loaded guns from being carried, except in homes or businesses. … That followed a 2010 U.S. Supreme Court ruling against a Chicago ban on handguns, even for self-defense in a home, that the justices said went too far. … Obama's Chicago roots and his personal history have given him close-up experience with gun violence. During his days as a community organizer, Obama was a bystander amid a volley of shots fired by a teenage gunman. His lack of action as president troubles some supporters." http://bit.ly/R4MicY

SILENT NRA SPEAKS. The Washington Post's Brad Plumer and David A. Farenthold report on the absence of the gun lobby from the post-Newtown debate: The NRA, which had been silent since the tragedy, released a statement Tuesday saying it had refrained from commenting out of respect for the Newtown families but is "prepared to offer meaningful contributions to help make sure this never happens again." The organization said it will hold a news conference Friday in Washington. http://wapo.st/WozgpG

CLOCK IS TICKING ON VIOLENCE AGAINST WOMEN ACT RENEWAL. ABC's Matthew Larotonda reports: The House of Representatives may introduce its version of the Violence Against Women Act this week, as Congress attempts to reauthorize an 18-year-old law designed to strengthen legal protections against victims of domestic violence. But prospects for the attempt to combine House Republican proposals for the law with the version passed by the Senate in April remain unclear as the year-end deadline draws near. The two bills are relatively similar, with the exception of three additions favored on the Senate side: expanded protections for the gay community, undocumented immigrants, and Native American women. Today Democratic women in the Senate said a House bill would be dead on arrival without those aspects. "A bill like that is an absolute non starter in the Senate," said Sen. Patty Murray of Washington, pointing out their version passed with a strongly bipartisan 68-31 votes last spring. http://abcn.ws/T6YND9

ON THE HILL, NEWTOWN FATHER CALLS FOR ACTION. ABC's Sunlen Miller reports: The father of a Newtown, Conn., child who survived the mass shooting at Sandy Hook Elementary School spoke out today on Capitol Hill with family members from victims of the Aurora, Colo., Virginia Tech, Tucson and Columbine shootings to call for a national conversation on gun control. "We all need to speak up," Andrei Nikitchyuk said after describing how his son "Bear" went to school Friday morning like he did any other day, and was helping turn in attendance sheets to the principal at the time of the shooting. Bear, a third-grader, "saw bullets passing by" and was pulled into the classroom of Abbey Clements, who barricaded the door, saving his son and a classmate, Nikitchyuk said. http://abcn.ws/YkjsZe

REP. MCCARTHY, LONG-TIME ACTIVIST, RENEWS HER CRUSADE. For the New York congresswoman who warned she would "embarrass" the White House on gun control, the issue is personal. Before her run for Congress, Carolyn McCarthy, a registered Republican who had worked as a nurse, began speaking out in favor of gun control after the Long Island Rail Road shooting. In 1996, her congressman, Rep. Dan Frisa, a Republican, announced that he planned to vote to repeal the federal Assault Weapons Ban. He was mounting his re-election campaign at the same time that McCarthy was advocating for tougher gun laws. "I told him, 'You're our congressman in this area where the Long Island Rail Road massacre happened, and you're telling me that you're still going to vote to repeal it? Are you not working for us? Are you not our public servant?'" McCarthy said as Frisa moved forward to vote in favor of repealing the Assault Weapons Ban, along with other House Republicans in March 1996. "And he said he had to stand up for the Second Amendment." http://abcn.ws/12oZrRv

LIBERALS BASH OBAMA'S CLIFF OFFER. Liberals on Tuesday blasted the White House's latest fiscal-cliff proposal as a cut to Social Security benefits. Perhaps it's a sign that President Obama and congressional Republicans have moved closer to a deal. "Everyone has a grandparent, a friend or a neighbor who relies on the Social Security benefits they earned to pay for medical care, food and housing. A move towards chained CPI would be a long-term benefit cut for every single person who receives a Social Security check," said House Progressive Caucus co-chair Keith Ellison, D-Minn., citing estimates that a chained CPI (as included in the GOP's proposal) would cost beneficiaries thousands over 15 years. "MoveOn members overwhelmingly oppose cuts to Social Security, Medicare, and Medicaid benefits, and they've made clear that they would see any fiscal agreement that cuts such benefits as a betrayal that sells out working and middle class families-whether the cuts come via a chained CPI, increased Medicare eligibility age, or in some other form," said MoveOn.org Executive Director Justin Ruben. http://abcn.ws/T7t1qU

AMEX CEO FOR TREASURY? Bloomberg's Hans Nichols and Julianna Goldman report: White House officials have approached American Express Co. (AXP) Chief Executive Officer Kenneth Chenault about joining President Barack Obama's second-term administration, possibly as Treasury secretary, according to two people familiar with the matter. White House Chief of Staff Jack Lew remains the leading contender for the Treasury job, the people said. Still, consideration of Chenault among Obama's staff may indicate the president hasn't made a final decision on a replacement for Treasury Secretary Timothy F. Geithner, who has said he plans to leave the post. Other potential roles for Chenault, a longtime Obama supporter, may be as Commerce secretary or as a senior adviser to the president, according to the people, who asked for anonymity to discuss internal administration deliberations. White House officials have also considered Xerox Corp. (XRX) CEO Ursula Burns as a potential nominee for the Commerce Department job, both of the people said. http://bloom.bg/ZixEnd

IN THE NOTE'S INBOX:

-NEW UNION AD: BOEHNERVILLE. AFSCME, NEA, AND SEIU are hitting House Speaker John Boehner with a new fiscal-cliff ad. The unions email: "The American Federation of State, County and Municipal Employees (AFSCME), the Service Employees International Union (SEIU) and the National Education Association (NEA) today launched a new television ad to protect Medicare, Medicaid, Social Security and education. These new ads, comparing Fank Capra's 'Potterville' to 'Boehnerville' will run in Arkansas, Louisiana, Minnesota, Missouri, Virginia and on National Cable. The third in a major campaign to protect vital services, 'Boehnerville' is a six figure television buy asking Americans to call their member of Congress and urge them to reject any proposal by Speaker Boehner that calls for devastating cuts to vital services like Medicare, Medicaid, Social Security andeducation." http://bit.ly/ZiyfVT

WHO'S TWEETING?

@markknoller: By naming Biden, Pres Obama seeking to show importance he places on the gun violence issue.

@DaveWalkerCAI: #fiscalcliff - It's time to recognize reality. Despite all the hype, the Fiscal Cliff is a warm-up for the real heavy lifting next year. DW

@SashaK: A map of U.S. showing NRA's ratings of members of congress. Noticeable block of F grades in big chunk northeast. http://nyti.ms/ZMFIvp

@learyreports: Q poll: Rick Scott's 'just plain awful' ratings make him vulnerable; Crist top Democratic challenger: http://bit.ly/TYT152

@johnsberman: Technically @BarackObama is a 3-time Time POY winner…since he was was included in "You."