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

NOTABLES:

• OBAMA HEADS BACK TO WASHINGTON AS THE CLOCK TICKS TOWARD THE CLIFF: The good news is the President is coming back to Washington today after nearly five days in Hawaii, but the bad news is that there's been no progress whatsoever on the fiscal cliff talks, ABC's Jonathan Karl reported on "Good Morning America." Actually there's more bad news too: The Treasury department said that on Monday the government is going to hit the limit on how much money we can borrow. On Capitol Hill, ABC's Sunlen Miller reports that we are awaiting Senate Majority Leader Harry Reid's next move. Last night he called on House Republicans to go first and take up the Senate-passed bill, which would extend the Bush-era tax rates for those families making under $250,000 a year.

• THE NEWEST SENATOR - A REPLACEMENT FOR INOUYE: Hawaii Gov. Neil Abercrombie announced on Wednesday Lt. Gov. Brian Schatz will replace the late Sen. Daniel Inouye as the U.S. senator from Hawaii - not Sen. Inouye's first choice. On the day he died, the late senator wrote a letter to Abercrombie asking that he pick Rep. Colleen Hanabusa, D-Hawaii, to replace him. Hanabusa made it to the final round of consideration, but she did not win the nomination. "The charge of the central committee was to take all points of view into account, from Sen. Inouye and from the rank and file - the Democratic grass roots," Abercrombie said during a news conference on Wednesday evening. "No one and nothing was preordained." http://abcn.ws/10kYqdT

• DID TV ANCHOR VIOLATE GUN LAW? Washington police are investigating whether NBC's David Gregory broke the law by holding up what appeared to be a 30-round gun magazine on Sunday's "Meet the Press" after the network apparently got conflicting opinions about whether it would be legal for him to do so, reports ABC's Shushannah Walshe and Steve Portnoy. It is illegal in the district to possess a "large capacity ammunition feeding device." But ABC News has learned from an official at the Bureau of Alcohol, Tobacco, Firearms, and Explosives that NBC had reached out to the federal agency on Friday for advice before displaying the weaponry. The D.C. officers advised the ATF spokesman that Gregory could display the magazine, provided it was empty, the source said. That turned out to be bad advice, as conservative media and gun rights activists were first to note. The ATF official describes this as a "misunderstanding," and says he hopes DC police will not bring charges. http://abcn.ws/12P6wdl

• GEORGE H.W. BUSH IN INTENSIVE CARE: Former President George H.W. Bush continues to fight a stubborn fever in the intensive care unit at Houston Methodist Hospital, reports ABC's Ben Waldron. "Following a series of setbacks including a persistent fever, President Bush was admitted to the intensive care unit at Methodist Hospital on Sunday where he remains in guarded condition," Bush family spokesman Jim McGrath revealed in a prepared statement. "Doctors at Methodist continue to be cautiously optimistic about the current course of treatment. The president is alert and conversing with medical staff, and is surrounded by family." http://abcn.ws/V5nO1e

THE NOTE:

So much for that holiday cheer.

President Obama and members of Congress are returning to a chilly Washington, DC today looking to strike a deal on taxes and spending before the end of the year.

ABC News' Chief White House Correspondent Jonathan Karl reported on "Good Morning America" that there has been contact between the Obama administration and House Speaker John Boehner's office - at least on the staff level - but neither side will say whether the two principals actually spoke. http://abcn.ws/W6IRQ1

And the prospects of a deal before the clock strikes midnight on Dec. 31 are looking bleaker than ever.

As The New York Times Jonathan Weisman and Jennifer Steinhauer report, there is "no clear path out of their fiscal morass … Senators will return to the Capitol on Thursday evening with nothing yet to consider. The series of votes waiting for them are unrelated to the fiscal deadline. The House will be gaveled into session at 2 p.m., but since Mr. Boehner has not called the members back to Washington, it will most likely be gaveled back into recess shortly thereafter." http://nyti.ms/12G8spn

And Politico's Manu Raju and Jake Sherman note that "the Senate almost certainly won't swoop in and help sidestep a potential economic calamity, senior officials in both parties predicted" and "the shortened timetable and the political dynamics appear to be insurmountable hurdles for a bipartisan deal by New Year's Day." http://politi.co/Tl1m6b

"We are already certain that we are going to go over this fiscal cliff," Karl predicted on "Good Morning America." "If these guys suddenly came to an agreement over the next few days they could pass it in the beginning of January."

But even that is looking like a long-shot now and the cliff is very much in sight.

Watch Karl's full "GMA" report: http://abcn.ws/W6IRQ1

THE BUZZ:

with ABC's Elizabeth Hartfield ( @LizHartfield)

SEN. TOM COBURN COULD BE OBSTACLE TO GUN CONTROL CHANGES. If there's one person most likely to keep new gun-control measures from passing Congress swiftly, it's Sen. Tom Coburn. ABC's Chris Good reports, conservatives revere the Oklahoma Republican for his fiscal hawkishness and regular reports on government waste. But he's also a staunch gun-rights advocate, and he's shown a willingness to obstruct even popular legislation, something in the Senate that a single member can easily accomplish. http://abcn.ws/Tz3MQQ

CLINTON LEAVES BEHIND A LEGACY OF FIRSTS. ABC's Sarah Parnass and Dana Hughes report, after 31 years of public service, Secretary of State Hillary Clinton leaves the limelight behind, but much more in her wake. She was the only first lady to refuse the traditional cookie bake off and the first secretary of state to visit more than 100 countries. She served under the first black president and was the first First Lady to have an office in the West Wing of the White House. Clinton was the first secretary of state to visit East Timor, and the first First Lady to later win elective office. And long before she ever appeared on a ballot, Clinton was the first child born to Hugh and Dorothy Rodham. http://abcn.ws/VeS5Kh

BEN AFFLECK WON'T RUN FOR MASSACHUSETTS SENATE SEAT. Those hoping the United States Senate may get a little less gray and a bit more celebrity-studded won't be getting their holiday wish. Despite speculation, Ben Affleck announced late Monday he would not go after John Kerry's Senate seat in his native Massachusetts if the senator is confirmed as secretary of state. The actor, who has been an increasingly popular presence in the political world recently, wrote on his Facebook page: "I love Massachusetts and our political process, but I am not running for office." http://abcn.ws/ZykiTQ

NOTED: NEITHER WILL TED KENNEDY JR. Ted Kennedy, Jr., the eldest son of the late Ted Kennedy, will not run for Senate in the Massachusetts in the impending special election either. Kennedy lives in Connecticut, but he had reportedly been mulling a run in the state where his family has a long legacy of public service. On Monday, however, he released a statement saying that he was grateful for "all of the offers of support" but that he didn't want to leave Connecticut, reports ABC's Elizabeth Hartfield. http://abcn.ws/VZaQkv

OBAMA'S SECOND INAUGURATION TO DRAW SMALLER CROWDS. The AP's Jessica Gresko reports, "city officials are expecting 600,000 to 800,000 visitors for the Jan. 21 inauguration, far less than the 1.8 million people who flooded the National Mall four years ago to witness the inauguration of America's first black president. Back then, some hotels sold out months in advance and city residents rented out their homes for hundreds of dollars a night. This time, hotels say they're filling up more slowly, with rooms still available and prices at or slightly below where they were four years ago." http://apne.ws/10hPfL4

MITCH MCCONNELL LIES LOW AS 'FISCAL CLIFF' NEARS. The Los Angeles Times Lisa Mascaro reports, "in the Senate, any deal on taxes and spending would be impossible without at least tacit approval from McConnell, given the power afforded the minority under the chamber's complex rules. But an aide said Wednesday that McConnell had not been in contact with any top Democrats including Sen. Harry Reid (D-Nev.), the majority leader, during the holiday break. McConnell and Obama have almost no working relationship. White House aides have mostly been talking with Senate Democrats, officials said." http://lat.ms/VjkiTs

ELIZABETH WARREN KEEPS A LOW PROFILE, FOR NOW. The Wall Street Journal's Victoria McGrane reports, "when she is sworn in this January, Elizabeth Warren might be expected to follow a fairly well-established model for making the switch from national figure to freshman senator: Keep your head down and stay out of the limelight. So far the Massachusetts Democrat has declined most interview requests, and she kept her answers brief at a postelection news conference. The question is whether she will stick to the script." http://on.wsj.com/YjWc99

TREASURY DEPARTMENT TAKING ACTION TO AVOID HITTING DEBT LIMIT. Roll Call's Sam Goldfarb reports, "the U.S. government is approaching the limit of its borrowing authority and will begin taking "extraordinary measures" to delay a vote by Congress on increasing the debt ceiling, Treasury Secretary Timothy F. Geithner said in a letter Wednesday to congressional leaders. Under normal circumstances, the federal government would reach its statutory debt limit on Dec. 31, Geithner said. However, the Treasury Department can take certain steps authorized by law, such as suspending investments in a federal employee retirement fund, to extend its borrowing authority for a short-term period." http://bit.ly/12HFw0i

WHO'S TWEETING?

@stevenacook: Cliff Diving? I don't know a single person who works for the federal govt who says their agency is ready for the fiscal cliff.

@mattyglesias: Welcome to the debt ceiling crisis: http://www.slate.com/blogs/moneybox/2012/12/27/debt_ceiling_crisis_it_s_not_just_the_fiscal_cliff.html …

@AntDeRosa: The reality of the "fiscal cliff" is if we went over it we'd actually be dealing with our obligations directly rather than pushing them off.

@shushwalshe: UConn geneticists to study DNA of Sandy Hook shooter in what looks to be a 1st of its kind study, but what can it find? http://abcn.ws/W3kKRZ

@Timodc: The result of Obama/Biden coddling Putin and mocking criticism of Russia on the campaign. -> http://nyti.ms/UvihUu

@mkraju: Inouye's office says it is "very disappointed" that the late senator's choice of his successor was not honored by the Hawaii gov