McCarthy hopeful after first meeting with Biden on debt limit: ‘I think that at the end of the day, we can find common ground’

By Maegan Vazquez and Clare Foran, CNN

House Speaker Kevin McCarthy did not walk away from his highly anticipated White House meeting on Wednesday with an agreement in hand to address the debt limit, but signaled optimism that both he and President Joe Biden can reach consensus “long before” the United States reaches default.

McCarthy and the president exchanged political jabs ahead of the meeting — preempting their negotiations with red lines relayed to the press and on social media. But emerging from the West Wing on Wednesday, the new House speaker had an unexpectedly hopeful tone as he underscored that he believes that they can come to an agreement, even though he remains entrenched in rejecting a key demand from the White House.

McCarthy told reporters after the meeting he informed Biden that the House would not pass a “clean” debt ceiling with no strings attached.

Asked what he offered the president, McCarthy said, “The only thing I heard for the last month was I’m not gonna negotiate with you. I just spent an hour sitting with the President in the Oval Office talking about what can we do on a debt ceiling. So, the first start is, okay, that’s different than what the last month was.”

The US hit the debt ceiling set by Congress in January, forcing the Treasury Department to start taking extraordinary measures to keep the government paying its bills and escalating pressure on Capitol Hill to avoid a catastrophic default later this year.

The White House and the new House GOP majority have been at odds over how to resolve a way to raise the debt limit, and while McCarthy called it “a good first meeting,” he also noted that they still “have different perspectives on this.”

“I think that at the end of the day, we can find common ground,” he added.

McCarthy said he told Biden he would like to come to an agreement “long before the deadline and we can start working on other things.” And a statement from the White House said Biden “underscored that he is eager to continue working across the aisle in good faith” and continue conversations with the speaker.

In the meeting, the White House statement said, the president “made clear” to McCarthy that it is a shared duty to not allow a default on the nation’s debt.

Following what was his first White House meeting since he won the speakership, McCarthy said he believes that a funding agreement could be reached for the next two years and that “you won’t see omnibuses anymore.”

“You’ll see the Senate and the House actually do what the American public has elected them to do,” he added.

The White House also said Biden “welcomes a separate discussion with congressional leaders about how to reduce the deficit and control the national debt while continuing to grow the economy.”

House Republicans have said that lifting the borrowing cap must be tied to spending reductions. And the White House, had previously countered that it will not offer concessions or negotiate on raising the debt ceiling.

The debt limit fight has been seen as an early test of McCarthy’s leadership, balancing competing demands from different factions of his conference amid a razor-thin majority. It’s also shedding light on how well McCarthy and Biden are able to work with one another.

Senate Republicans have indicated they will sit back and see how the House GOP maneuvers a way to raise the $31.4 trillion borrowing limit — before deciding if they need to insert themselves into the process.

Battle lines begin to be drawn

Republicans face a political risk as they push to cut spending: If they propose cuts to popular government programs and services, they could face a public backlash.

McCarthy prepared for the White House meeting by consulting regularly with allies on and off the Hill, sources familiar with the preparation told CNN.

This week McCarthy and his House GOP allies have been hashing out initial demands, discussing steep cuts to domestic programs and a trim to defense spending — all the while steering clear of two programs to avoid voter blowback: Medicare and Social Security.

House Republicans had been hoping to strengthen their negotiating hand with the White House by uniting around a proposal, but finding conference-wide consensus on spending cuts has proved challenging.

The view from Republicans heading into Wednesday’s meeting was that it is still early and there are still months of negotiations ahead — meaning there’s plenty of time for McCarthy to lay out specifics. Still, leaders have also been aware they have to begin laying the groundwork with their members now.

While rhetoric in statements from McCarthy and the White House was relatively toned down following Wednesday’s meeting, both parties had used the last week to draw lines in the sand about the negotiations.

McCarthy’s position that cuts to Medicare and Social Security are not on the table in exchange for a debt ceiling increase has long drawn skepticism the White House.

And in a memo to “interested parties” dated Monday that was written by National Economic Council Director Brian Deese and Office of Management and Budget Director Shalanda Young, Biden’s top economic advisers said the president intended to pose two questions to McCarthy on Wednesday: Whether McCarthy will commit to the US not defaulting on its financial obligations and when McCarthy and House Republicans will release their budget.

A day ahead of the meeting, the president suggested McCarthy was entering the talks from a weakened position, hampered by agreements he made with an unruly GOP conference.

Calling McCarthy a “decent man,” Biden nonetheless said he had been forced to cater to extremist Republicans in his quest to become speaker.

Biden said at a high-dollar fundraiser in Manhattan that McCarthy had to make commitments “that are just absolutely off the wall for the speaker of the House to make.”

Responding to the president’s fundraiser comments, McCarthy told reporters, “Apparently, he doesn’t understand … I’m looking forward to sitting down with the president, negotiating for the American public, the people of America, on how we can find savings. We’ve watched what the spending has done, we watched it brought us inflation, we watched the challenge that it happened. We’re looking forward to changing the course.”

This story has been updated with additional developments on Wednesday.

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CNN’s Lauren Fox, Phil Mattingly, Kevin Liptak, Manu Raju, Tami Luhby, Kit Maher, Paul LeBlanc, Sarah Fortinsky and Aaron Pellish contributed to this report.