EXCLUSIVE: Obama Talks 'Fiscal Cliff' with Barbara Walters, Predicts GOP Will Cave on Tax Rates, But Suggests Trade for Spending Cuts

Also - Recognizes Syrian Opposition

Watch Barbara Walters' 4th Annual Holiday Interview at the White House on 20/20 - Friday Night at 10 p.m. ET-

Comprehensive reports on Obama and Walters from Devin Dwyer: Fiscal Cliff - http://abcn.ws/TO5bxQ Syria - http://abcn.ws/QUfxPw

Before we dive into the Obama interview, some other Notables:

Another Exclusive - Women Senators Tell Diane Sawyer They'd Have 'Fiscal Cliff' Solved - http://abcn.ws/U2m6j7 Mich. Gov. Signs 'Right to Work' Anti-Union Bill - http://abcn.ws/Uf9ody 50th State Must Allow Concealed Guns - Illinois must authorize conceal and carry handguns - State has 180 days to comply with court decision that makes concealed weapons legal (to varying degrees) nationwide - http://abcn.ws/TNUoDD U.S. Sells Final AIG Shares for $22.7 Billion in Profit - http://abcn.ws/X6KAWw

Back to Obama -

Obama Suggests Trade Spending for Tax Hike on Wealthy - The president hinted at new flexibility on entitlement spending cuts, but only once Republicans concede on top tax rates.

"If the Republicans can move on that [taxes] then we are prepared to do some tough things on the spending side," Obama said. "Taxes are going to go up one way or another. And I think the key is that taxes go up on high-end individuals."

(As Obama was giving the interview, Speaker John Boehner was on the House floor calling for the White House to offer more spending cuts)

On Tax Rates - 'Hostage' Negotiation - "I'm pretty confident that Republicans would not hold middle class taxes hostage to trying to protect tax cuts for high-income individuals," Obama told Walters.

"I don't think they'll do that," he said of rates for families earning $250,000 a year or less.

"I remain optimistic. I'd like to see a big package. But the most important thing we can do is make sure that middle class taxes do not go up on Jan. 1."

…

"I believe that both Speaker Boehner and myself and the other leaders want to see a deal happen. And the question now is can we get it done. The outlines, the framework of what a deal should look like are pretty straightforward." http://abcn.ws/TO5bxQ

Medicare - Raising the Medicare age from 65 to 67 is "something that's been floated," Obama said, not dismissing the idea outright.

"When you look at the evidence it's not clear that it actually saves a lot of money," he said. "But what I've said is let's look at every avenue, because what is true is we need to strengthen social security, we need to strengthen Medicare for future generations, the current path is not sustainable because we've got an aging population and health care costs are shooting up so quickly." http://abcn.ws/TO5bxQ

Latest 'Cliff' Talks - Jon Karl reports: Bottom Line: Still no real progress.

There has been an exchange of offers between the White House and the Speaker of the House over the last 24 hours.

Last night, the White House sent the Speaker an offer that looked very similar to what they had previously proposed (the first offer was $1.6 trillion in tax increases; I am told the most recent offer was $1.4 trillion). Still nothing new on spending.

House Republicans viewed the offer as unserious (in fact, they saw it as a step backwards because they thought the White House was moving to $1.2 trillion).

So - House Republicans offered a counter-offer this afternoon that looks almost exactly like what they had offered previously: $800 billion in tax revenue (through tax reform, not higher rates).

Syria - "We've made a decision that the Syrian Opposition Coalition is now inclusive enough, is reflective and representative enough of the Syrian population," Obama told Walters.

Obama expressed caution about some Syrian factions involved in the coalition, warning that the U.S. will not support extremist elements.

"Not everybody who's participating on the ground in fighting Assad are people who we are comfortable with," Obama told Walters. "There are some who, I think, have adopted an extremist agenda, an anti-US agenda. And we are going to make clear to distinguish between those elements."

The president specifically singled out the group Jabhat al-Nusra for its alleged affiliation with Al Qaeda in Iraq. The Obama administration blacklisted al-Nusra earlier this week, imposing economic sanctions and branding it a terrorist organization.

"Obviously, with that recognition comes responsibilities," Obama said of the young coalition. "To make sure that they organize themselves effectively, that they are representative of all the parties, [and] that they commit themselves to a political transition that respects women's rights and minority rights."

*Hillary Clinton had been expected to make the recognition in Marrakesh, but illness derailed h er trip. Deputy Secretary of State Bill Burns will go in her stead -

Mich. Gov Signs Bill to Curb Unions - From Elizabeth Hartfield - Michigan's Republican-controlled state legislature approved a controversial right-to-work bill today by a vote of 58-51. Michigan's law makes the payment of union dues voluntary for private-sector unions and most public-sector unions (police and firefighters would be exempt). In anticipation of the vote, thousands of protesters descended on the statehouse in Lansing today, demonstrating their opposition to the bill both inside and outside the Capitol building. Demonstrations also moved to the governor's main office as well which is officially titled the Romney building, after former Michigan Gov. George Romney (father of Mitt).

There's symbolism in the location. During his tenure as governor, Romney signed the first bills in the state that gave collective bargaining rights to public-sector employees. http://abcn.ws/Uf9ody

Americans Invested in 'Fiscal Cliff' - Chris Good reports: Budget stalemates can be esoteric and abstract, but for many Americans, this one isn't. A new Gallup poll finds that 64 percent believe there would be a negative effect on their "personal financial situation" if "the fiscal cliff tax increases and spending cuts go into effect," while 33 percent said they don't. Among key subgroups, just about everyone is worried. Concerns were higher (68 percent) among lower-income households, making less than $36,000 per year, than among Gallup's two higher-income brackets (62 percent in each). Those with children under 18 (67 percent) were more concerned than those without (63 percent). http://abcn.ws/Uy5zPM

Obama's 2nd Inaugural: Afterthought - AP's Nedra Pickler - …"The capital is pre-occupied with a looming economic crisis, exit from war and a reshuffling in Congress. Ticket demand is lower. Hotels are far from booked. And from Capitol Hill to the White House, the upcoming festivities seem to be barely on anyone's radar. More muted inaugural celebrations are typical with every second presidential term. But it's almost as if Obama's swearing-in, on the Martin Luther King Jr. holiday, is a been-there-done-that afterthought around town. Perhaps Obama is a victim of his own historical significance. Perhaps it's a sign of how far the nation has come, some 50 years after the March on Washington that drew a multitude of people calling for civil and economic rights for African-Americans." http://abcn.ws/XQ1NbD

Michelle Obama Collects Toys for Tots with Marines - http://abcn.ws/UyEdZD

Jewish Representation in Congress Falls - http://abcn.ws/W3o4yR

Atlanta Councilman to Run 100 Miles for Weight-Loss Challenge-Atlanta Councilman H. Lamar Willis weighed more than 327 pounds a year ago. He has since managed to lose more than 100 pounds and isn't going to stop there. http://abcn.ws/UekMqa (Jilian Fama)