The Note's Must-Reads for Wednesday December 5, 2012 FISCAL CLIFF/TAXES ABC News" Devin Dwyer, Sunlen Miller, Mary Bruce and John Parkinson: "Obama Says "Fiscal Cliff" Deal Hinges On Top Tax Rates" President Obama says he sees "potential" for averting the "fiscal cliff" in 28 days, but that no deal will get done unless Republicans consent to raise income-tax rates on the top 2 percent of U.S. earners. ABC News" Michael Falcone: "Medicare And The Fiscal Cliff: To Cut Or Not To Cut?" The New York Times" Jonathan Weisman: "In Tax Fight, G.O.P. Seeks a Position to Fall Back On" With President Obama insisting on higher tax rates for affluent Americans and winning public support for the idea, Congressional Republicans find themselves in an increasingly difficult political spot and are quietly beginning to look for a way out. Senior Republican leadership aides say they are contemplating a fallback position since a standoff over expiring tax rates will be portrayed by Democrats as evidence that the opposition is willing to allow taxes to rise on the middle class to keep taxes from rising on the rich - and their intransigence could mean taxes go up on rich, poor and middle class alike. The Washington Post's Lori Montgomery and Rosalind S. Helderman: "Obama: "Fiscal cliff" deal must include higher tax rates for top earners" President Obama on Tuesday rejected a GOP proposal to collect new taxes from high earners by limiting their deductions and tax breaks, insisting that any deal to avert the year-end "fiscal cliff" must include an agreement to raise the top income tax rates. We're going to have to see the rates on the top 2 percent go up. And we're not going to be able to get a deal without it," Obama told Bloomberg Television in his first television interview since the Nov. 6 election. Politico's Jake Sherman, Carrie Budoff and John Bresnahan: "GOP, Dems fight for upper hand on fiscal cliff" The fiscal cliff negotiations are at such a standstill that not even aides to President Barack Obama and House Speaker John Boehner (R-Ohio) talked Tuesday. And the way the White House sees it, there won't be further face-to-face talks between the two leaders until Boehner says he's willing to raise income tax rates. DEFENSE SPENDING The Hill's Jeremy Herb and Ramsey Cox: "Senate passes $631B defense policy bill 98-0" The Senate on Tuesday passed a massive, wide-ranging $631 billion defense authorization bill that restores threatened Pentagon biofuels programs, issues new sanctions against Iran and changes U.S. detention policy for American citizens. The National Defense Authorization Act (NDAA) passed the Senate unanimously 98-0 after the bill was debated for five days and hundreds of amendments were considered on the floor. The Wall Street Journal's Julian E. Barnes: "Defense Bill Draws White House Objections" The Senate on Tuesday approved annual legislation establishing policy for the U.S. Defense Department, voting to set limits on the government's ability to detain American citizens without trial, while also blocking prisoner transfers from Guantanamo Bay, Cuba, to the U.S. LINK SENATE BANK ROLE The Boston Globe's Noah Bierman: "Elizabeth Warren in line for Senate bank role" Senator-elect Elizabeth Warren, one of the fiercest critics of big banks, will probably be named to the Senate Banking Committee when she joins Congress next month, according to two Senate aides. The appointment has not been formally announced by Senate leaders and will not be final until an official vote on assignments by the members. The pending appointment was described to the Globe by aides who requested anonymity because Senate Majority Leader Harry Reid, a Nevada Democrat, has not made a formal announcement. Warren's office had no immediate comment. There had been speculation over the appointment since Warren's election last month, including several ... LINK GOP Bloomberg's James Rowley: "Four Republicans Booted From House Budget, Finance Panels" Four Republicans who opposed Speaker John Boehner on spending and budget issues won't return to the Budget or Financial Services committees when the next session of Congress begins in January, according to a House Republican leadership aide. The Republican Steering Committee removed Walter Jones of North Carolina and David Schweikert of Arizona from the Financial Services Committee, said the aide, who asked not to be named. Justin Amash of Michigan and Tim Huelskamp of Kansas were removed from the House Budget Committee, the aide said. The Washington Times" David Sherfinski: "Boehner plan is criticized by both sides" Republican leaders struggled Tuesday to contain the backlash from conservatives over the GOP's offer of $800 billion in tax increases to head off the "fiscal cliff" - a move that didn't impress the White House, even as it spawned a rebellion on the right. Conservative lawmakers and interest groups said House Speaker John A. Boehner's offer abandoned core Republican principles and earned no credit from a White House that has insisted on even bigger tax increases and balked at major spending cuts. SECRETARY OF STATE USA Today's David Jackson: "Obama: No Decision Yet On Secretary Of State" President Obama says he hasn't decided on his next secretary of State, but indicated he is tired of all the Susan Rice bashing. ABC NEWS VIDEO "Anna Wintour Considered for U.S. Ambassador Position" LINK "Washington, D.C., Gridlocked as Fiscal Cliff Approaches" LINK