(Bloomberg) -- President Joe Biden and House Speaker Kevin McCarthy followed similar, winding paths to find themselves back at a familiar point: staring out over the brink of a debt ceiling crisis.
The two men, neither strangers nor friends, met privately for just over an hour Wednesday in the Oval Office, seated under a portrait of Franklin Delano Roosevelt — a president Biden admires and one whose Depression-era New Deal gave rise to an expansion of government programs.
In a few months, the US will come to the end of its credit limit and the ability to make good on its obligations. The question between now and then is whether Biden is willing to cut a deal on spending to raise the debt limit — and will McCarthy be able to deliver on any agreement he makes.
The duo's interactions over the next several months will have a significant impact on the economy and, by extension, their political futures.
"I think, at the end of the day, we can find common ground," McCarthy said as he left the White House.
A White House statement opened a door for potential negotiations, saying Biden welcomed deficit talks even as they would be "separate" from the debt ceiling.
The US already is at risk of slipping into a recession in the coming year. Breaching the debt limit would send financial markets tumbling and push borrowing costs higher for voters on their credit cards, cars and houses.
Voters would be looking to lay blame in the 2024 election, when Biden is expected to run for a second term and Republicans will be trying to consolidate control of Congress.
Current partisan rhetoric has echoes of 2011, the last time a standoff brought the US to the brink of a default.
McCarthy at the time lambasted then-President Barack Obama for not taking fiscal talks seriously enough, a refrain he's now reprising.
Democrats, meanwhile, blamed Republicans for brinkmanship on the debt limit in a confrontation that produced the first downgrade to the sovereign US credit rating. That case is fresh in Biden's mind now.
Beyond the political posturing, some members of both parties hold out hope Biden and McCarthy share enough in their outlooks and temperaments — despite their generational difference — to pull back from the brink.
"I think they are both career public servants. I think they are both extremely political. I think they're both pragmatic," Representative Tom Cole, a senior House Republican from Oklahoma, said. "And I think they both know how to make a deal."
Biden, 80, spent decades in the Senate and failed twice to ascend to the White House before winning the presidency in 2020. Like Biden, McCarthy, 58, has spent much of adult life in politics and began a plodding climb to the speakership, despite setbacks, almost as soon as he entered the House in 2007.
Their relationship, limited as it is, dates to when then-Vice President Biden acted as Obama's congressional liaison and deal-maker. McCarthy at the time was rising through the House Republican leadership ranks. He served as chief recruiter for Republican candidates in the 2010 midterms. That election produced a GOP takeover of the House and set up the last debt-ceiling confrontation.
While vice president, Biden would occasionally host McCarthy, as well as other GOP lawmakers, for breakfasts at his official residence on the grounds of the US Naval Observatory in Washington.
But Biden's main negotiating partner had been Senate Republican leader Mitch McConnell, with whom Biden served for decades. This time, McConnell is leaving negotiations to McCarthy, who enters the fight politically weakened by the drawn-out drama of his election as speaker.
McCarthy will have to navigate the demands of a vocal and agitated group of far-right Republicans, who have enough votes in the thin Republican majority to block any deal and can at any time mount a challenge to McCarthy's speakership.
Whatever ties Biden and McCarthy forged previously had cratered under the influence of former President Donald Trump, to whom McCarthy was deferential and beholden, and who still holds great sway over McCarthy's caucus.
Trump, under whom the debt limit was lifted or suspended three times, has been exhorting Republicans to play "tough" on the issue.
Biden also has no history with most House Republicans, almost two-thirds of whom weren't in office when Biden was making the rounds in Congress as vice president. And the House GOP has made it a high priority to investigate Biden's administration and his family, particularly the president's son Hunter Biden.
In the early months of Biden's presidency, and in the aftermath of the Jan. 6, 2021, insurrection at the Capitol, Biden gave McCarthy the cold shoulder. McCarthy on Wednesday suggested a potential thaw.
"At no time did someone get into a shouting match," he told reporters at the Capitol. "That's a positive for today."
McCarthy entered Wednesday's meeting without having a developed list of demands. He's set out relatively vague guidelines for what he's seeking — unspecified spending cuts and laying out a path to balancing the budget, something the US government hasn't done in over 20 years. Some Republicans have urged cutting defense spending, an unheard-of position in the past.
After meeting with Biden, he sought to tamp down concerns that a stalemate could push the government to the edge of a default and said talks were better than he expected. He is aiming for a two-year agreement.
But he also reiterated GOP demands for spending cuts.
"We don't have a revenue problem we have a spending problem," he said, adding that an increase in the debt limit without an agreement on spending is "not going to happen."
Biden has said he wants talks about attacking the nation's debt to include revenue — which means raising taxes, something that would be difficult or even impossible for McCarthy to agree to. He's also said he's open to talks on cutting spending, but wants that separated from raising the debt ceiling.
Both sides have ruled out touching the two biggest components of federal spending: Social Security and Medicare. That's despite the fact that in the latest CBO projections, increased spending on Social Security and major health entitlements are the major drivers of future budget deficits and debt.
Republican Representative Mike Simpson, a longtime member of the appropriations committee, acknowledged that Biden has stronger ties with other Republicans like McConnell.
But that wouldn't necessarily stand in the way of a deal. "It can be a good thing not to have a relationship," he said.
--With assistance from Justin Sink.
(Adds McCarthy quote in 27th paragraph)
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