“The provision causing the most heartburn for Democrats on Capitol Hill is one that would change the way inflation is measured to ultimately reduce payments to Social Security beneficiaries. Obama floated the so-called chained consumer price index idea to House Speaker John Boehner (R-Ohio) last year during their failed negotiations over raising the debt ceiling,” Politico writes. “But by including it in his fiscal cliff offer, Obama is guaranteeing that if and when a deal comes together, it’s almost certain to include the provision. It would force Democrats — who have spent decades building their brand as the protectors of Social Security and entitlement programs — into a difficult vote.”

Republicans don’t want to give the president credit for a budget tactic they have used before. “The Obama plan projects savings of $1.22 trillion over ten years, including $290 billion in reduced interest payments as the nation's debt goes down,” USA Today writes, noting that “Republicans are trying to have it both ways on spending cuts.” More: “House Republicans say that shouldn't count as a spending cut, and score the Obama plan with $930 billion in cuts -- not enough, they say, for a one-to-one match of the $1.2 trillion in higher taxes envisioned under the Obama plan. But the Republicans have counted lower interest payments as budget cuts before. That includes the budget reductions that accompanied the increase in the debt ceiling in 2011.”

The labor groups AFSCME, NEA, and SEIU have launched a new 30-second TV ad in the fiscal-cliff debate.

“The late Sen. Daniel Inouye will lie in state in the Capitol Rotunda on Thursday, a rare honor usually reserved for presidents,” USA Today writes.

Knives out for Hagel: “The former Nebraska Republican senator — who is expected to get President Barack Obama’s nod to become his next secretary of defense — is anything but a favorite among many of his former GOP colleagues on Capitol Hill. His onetime fellow Republican senators are quick to point out his role as a chief Bush antagonist over Iraq, his opposition to sanctions in places like Iran and comments he’s made about Hamas, Hezbollah and North Korea,” Politico writes. “Some privately note he rubbed them the wrong way; one GOP senator called him ‘prickly.’ Another was irked by the moderate Republican’s penchant for taking on his party, including this past election cycle, when he backed Democrat Bob Kerrey’s Senate candidacy in Nebraska over Deb Fischer, the Republican who later went on to win the race. Off of Capitol Hill on Tuesday, critics — including the Anti-Defamation League — slammed his record on Israel, including comments he made years back when he called pro-Israel forces in Washington the ‘Jewish lobby.’”

Immigration reform will have an interesting twist next year with Trey Gowdy at the helm of a House immigration subcommittee. “House leaders chose a vocal opponent of illegal immigration to head up the chamber's immigration subcommittee, which will play an integral role in the upcoming debates on how to reform the nation's immigration laws,” USA Today reports. “Incoming House Judiciary Chairman Rep. Bob Goodlatte, R-Va., announced Tuesday that Rep. Trey Gowdy, a former South Carolina prosecutor who was part of the GOP freshman wave of 2010, will head the Subcommittee on Immigration and Border Security.”

Ed Markey seems to have more than just a passing interest in running for John Kerry’s seat, if nominated to be Secretary of State. “A Massachusetts resident relayed to a Globe reporter the contents of a 20-minute survey an out-of-state firm conducted via telephone that assessed Markey’s strengths and weaknesses in a potential match-up against Senator Scott Brown,” the Boston Globe reports.

Michael Dukakis, 79, though might still be in the running to be Kerry’s replacement. “When Dukakis was reminded by a Globe reporter that his denial of interest was not an absolute no, he said, ‘That’s what I have to say,’” the Boston Globe reports.