By MICHAEL FALCONE ( @michaelpfalcone )

NOTABLES

• LIZ CHENEY BOWS OUT CITING 'SERIOUS HEALTH ISSUES … IN OUR FAMILY': Liz Cheney, the 47-year-old daughter of former Vice President Dick Cheney, is dropping out of the Senate race in Wyoming. "Serious health issues have recently arisen in our family, and under the circumstances, I have decided to discontinue my campaign. My children and their futures were the motivation for our campaign and their health and well-being will always be my overriding priority," Cheney said in a statement this morning, ABC's JEFF ZELENY and RICK KLEIN report. "As a mother and a patriot, I know that the work of defending freedom and protecting liberty must continue for each generation… Though this campaign stops today, my commitment to keep fighting with you and your families for the fundamental values that have made this nation and Wyoming great will never stop." http://abcn.ws/1gaUstm

• BACKSTORY: A Republican official tells ZELENY that Cheney's decision to abruptly leave the Senate race in Wyoming is because of health concerns of one of her three daughters - not her father, former Vice President Dick Cheney. She has three daughters, who were 19, 16 and 13 when the campaign began last summer. Republicans close to the Cheney campaign said Liz Cheney was also struggling to out-raise her rival. She thought her entry into the race would squeeze off money to incumbent Sen. Mike Enzi, but it did the opposite. He raised more than $1 million in the fourth quarter of 2013 - a big haul for Wyoming and him. The timing was the biggest surprise. Several Wyoming Republicans said they thought she might re-evaluate her candidacy this spring. The big question is whether she stays in Wyoming or moves back to Virginia.

• A GOOD DAY FOR MIKE ENZI: The decision to abandon her Senate bid came nearly as abruptly as her decision to initially enter the contest last July, when she surprised party leaders in Wyoming and Washington by setting up a contentious primary fight against Enzi, a well-respected three-term Republican, ZELENY and KLEIN note. She sought to rally the support of her father's old political network in Wyoming, but struggled to introduce herself to Wyoming voters and to win over many Republican leaders, who sided with Enzi. Her candidacy sparked controversy inside her own family when she declared her opposition to same-sex marriage. Her younger sister, Mary Cheney, who is lesbian, forcefully challenged Liz's position and suggested that she had changed her views. The fight even drew in their parents, the former vice president and his wife, Lynne, who said they were "pained" to see the private rift become so public, but they effectively sided with Liz. http://abcn.ws/1gaUstm

THE ROUNDTABLE

ABC's JEFF ZELENY: Liz Cheney's abrupt decision to leave the Wyoming Senate race doesn't affect the fight for control of the Senate. There is still one number above all to remember: Six. That's how many seats Republicans must win to take control of the Senate. As Congress returns to Washington today and begins a contentious mid-term election year, the fight to win the Senate majority will dominate many debates. Democrats are trying to rebound and defy history of the six-year curse, when a president's party loses seats or control of Congress. A fight over extending unemployment benefits will set the stage for a broader conversation over income inequality. Democrats hope this is a central issue that will help bolster their prospects. Republicans start the year with a strong political hand, particularly as deep skepticism still rages over Obamacare. But whether the party resists the temptation to overreach is one of the biggest questions to be answered as 2014 rolls along.

ABC' RICK KLEIN: The end of Cheney-for-Senate marks an early stumble in a year that may be defined by political dynasties - some with more than legacy-defining stakes on the line. Aside from the abandoned bid by this daughter of the former vice president, two grandsons of former presidents (H.W. Bush and Carter) are seeking their first statewide offices this year, and there's even a Clinton-in-law who wants her old House seat back. The candidates are using the famous names in different ways and to varied effect. But the Cheney campaign's failure to connect with Wyoming Republicans - the family health issues she's citing aside - stands as a lesson that no name is big enough to carry an election without an argument and strong rationale for a candidacy. It's also a reminder that national names aren't necessary bigger than those of obscure lawmakers, even in the state a family has called home.

ABC's SHUSHANNAH WALSHE: Liz Cheney's surprise announcement takes out one of the most closely watched 2014 races. Filled with family drama, intra- party squabbling, and even issues of age it was one to watch, but citing family health issues Cheney is out. She was also never able to close polls that showed wide, double digit gaps with her opponent Sen. Mike Enzi. Unlike other conservative challengers who have been able to gather support on the right, including Matt Bevin in Kentucky, Cheney was never able to rally the right against the consistently conservative Enzi, the way other candidates have. Now the focus will go back to those other primaries from Kentucky to South Carolina to Tennessee to Mississippi. Can conservative challengers kick out incumbents this year? It won't be easy, but outside conservative groups like the Senate Conservatives Fund and the Madison Project are engaged in the ones they see as winnable and are involved with money and energy. Both will be needed to pull off high profile victories.

BUZZ

RAND PAUL CALLS OBAMACARE 'A MESS,' UNSURE IF FAMILY IS COVERED. Democrats have pointed to Kentucky's state health exchange as an Obamacare success story, but Sen. Rand Paul of Kentucky said on "This Week" that the system is "a mess," describing how his son was incorrectly enrolled in Medicaid, and saying he's unsure if his own family is currently covered. "The other day I actually tried to get my son signed up through the Kentucky exchange, you know that the Democrats have said is so good. And I have here my son's Medicaid card," Paul told ABC's GEORGE STEPHANOPOULOS Sunday, waving the card. "We didn't try to get him Medicaid, I'm trying to pay for his insurance. But they automatically enrolled him in Medicaid." "I'm trying to pay for insurance and can't pay for it, and I'm uncertain now whether I'm enrolled in D.C. and/or Kentucky," Paul added. "And, it's a mess. I keep getting an error code every time I go in, it will not let me edit my policy to try to make sure that my family is covered… This is an unfolding disaster that I don't think gets better anytime soon." Despite Paul's criticism, enrollments in Kentucky have surged since the launch of the exchange in October, according to ABC's KYLE BLAINE, going up 40 percent after Thanksgiving, and forcing state administrators to hire extra call-center workers and application processors. http://abcn.ws/1iGgVTe

NOTED: PAUL CALLS FOR 'REASONABLE SENTENCE' FOR SNOWDEN. Sen. Rand Paul, R-Ky., a critic of the NSA who is bringing a class action lawsuit against its surveillance programs, said on "This Week" that he does not believe NSA leaker Edward Snowden should be given clemency, but that he should be offered a "fair trial with a reasonable sentence" to allow him to return to the U.S. to face charges, ABC's IMTIYAZ DELAWALA notes. "I don't think Edward Snowden deserves the death penalty or life in prison, I think that's inappropriate, and I think that's why he fled, because that's what he faced," Paul told GEORGE STEPHANOPOULOS on "This Week" Sunday. "Do I think that it's okay to leak secrets and give up national secrets and things that could endanger lives? I don't think that's okay either, but I think the courts are now saying that what he revealed was something the government was doing was illegal." http://abcn.ws/19W7JF7

CHUCK SCHUMER: 'INSULTING' FOR RAND PAUL TO SAY EXTENDING UNEMPLOYMENT BENEFITS A DISSERVICE TO WORKERS. Yesterday on "This Week," Democratic Sen. Chuck Schumer took a swipe at Republican Sen. Rand Paul, saying he thought it was "insulting" that the Kentucky senator argued that it is a "disservice" to continue unemployment benefits for workers after a certain period, according to ABC's BEN BELL. "Most of the people I meet who are on unemployment are people who have had jobs for 25 years, lost them, they've been knocking on doors every week," Schumer said on "This Week. "I think it's a little insulting, a bit insulting to American workers when Rand Paul says that unemployment insurance is a disservice." "They want to work, they don't want unemployment benefits," the New York senator added. "They're just hanging on with unemployment benefits, you cut them off, they may lose the house they paid for, take their kids out of college. So I would hope he would reconsider, past the three month extension." Paul, appearing on "This Week" before Schumer, seemed to indicate he'd be open to extending unemployment benefits for the long-term unemployed if the costs are paid for, while still arguing such an extension would provide some disincentive to work. http://abcn.ws/19W98vn

A BUSY MONTH AT THE SUPREME COURT. With two emergency applications regarding gay marriage and health care, potential decisions, and new cases, January has the potential to be a big month for the U.S. Supreme Court. ABC's ARIANE DE VOGUE has a rundown: http://abcn.ws/1lvRBPC

IN THE NOTE'S INBOX

EXCLUSIVE: CONSERVATIVE GROUP LAUNCHES SIX-FIGURE DIGITAL AND SOCIAL MEDIA CAMPAIGN TARGETING IRS. ForAmerica, a conservative 501(c)4 organization with over four million supporters, is launching a six-figure social media and digital ad campaign today raising awareness of what it calls "IRS abuses against Americans concerned with the direction of the country and for its escalating power, both with the enforcement of ObamaCare and new regulations aimed at silencing non-profit social welfare groups." The group, which is chaired by L. Brent Bozell III, is unveiling its "End IRS Abuse" campaign, which will direct people to comment on new proposed IRS regulations in advance of a Feb. 24 public comment deadline. The group plans to promote the campaign online and on social media, including Internet ads and on ForAmerica's Facebook and Twitter pages, and on its website: www.foramerica.org.

WHAT WE'RE WATCHING

MARCO RUBIO PLANS SPEECH ON POVERTY ISSUES. Sen. Marco Rubio, R-Fla., plans to deliver a policy speech this Wednesday (the 50th anniversary of President Lyndon Johnson declaring a "War on Poverty") about reforming anti-poverty programs and improving income mobility in America. Yesterday, Rubio released a video message arguing the war has failed. Here's an excerpt: "For millions of Americans living in poverty, the American Dream does not seem reachable - and that's unacceptable. After 50 years, isn't it time to declare big government's war on poverty a failure? Instead of continuing to borrow and spend trillions of dollars on government programs that don't work, what our nation needs is a real agenda that helps people acquire the skills they need to lift themselves out of poverty and to pursue the American Dream." WATCH: http://youtu.be/HY-rk14scrg

WHO'S TWEETING?

@PhilipRucker: Don't miss @mateagold's look at the Kochs - $400 million in 2012, a complex "maze of groups that cloaks its donors" http://www.washingtonpost.com/politics/koch-backed-political-network-built-to-shield-donors-raised-400-million-in-2012-elections/2014/01/05/9e7cfd9a-719b-11e3-9389-09ef9944065e_story.html?hpid=z1 …

@mlcalderone: Breaking: Atlantic's @thegarance heading to Yahoo News http://huff.to/19Mrlhp

@JohnJHarwood: Useful perspective on all the hyper-ventilation over NSA surveillance http://wapo.st/1aa41YS

@mollyesque: Why is Frank Luntz so depressed? My story: http://www.theatlantic.com/politics/archive/2014/01/the-agony-of-frank-luntz/282766/ …

@carolynryan: "We do not believe she was going very fast." - Angela Merkel Hurt in Cross Country Skiing Accident http://nyti.ms/1hqn2KZ