Obama, McCain Meet While Bill Speaks About Hillary

President-elect Barack Obama and Sen. John McCain, R-Ariz., may have been arguing about the economy just two weeks ago, but today the two met for the first time since the Al Smith Dinner for a productive conversation about the issue -- and others.

"We're just going to have a good conversation so we can work together to fix up the country and also to thank Senator McCain for his service to the country," the President-elect told reporters at the onset of the meeting.

Asked if he intended to work with Obama, McCain said, "obviously."

According to aides for both men, the Republican senator and the President-elect discussed earmarks and ethics reforms, climate change, immigration reform, and the possibility of closing down Guantanamo Bay. McCain raised the subject of Pentagon waste; Obama brought up corporate welfare.

Jake TapperPlay

They both agreed that with the severity of the crises facing the country, the nation's capital needs to usher in a new era of bipartisanism.

The meeting was "excellent," a source close to Obama told ABC News, with "great chemistry and agreement."

McCain later told a friend that Obama "couldn't have been nicer."

McCain was apparently pleased that the meeting was real and substantive, one source tells ABC News, rather than just the traditional post-election photo op, since he kept telling Obama how much he appreciated the meeting.

The two later released a joint statement, saying, "At this defining moment in history, we believe that Americans of all parties want and need their leaders to come together and change the bad habits of Washington so that we can solve the common and urgent challenges of our time. It is in this spirit that we had a productive conversation today about the need to launch a new era of reform where we take on government waste and bitter partisanship in Washington in order to restore trust in government, and bring back prosperity and opportunity for every hardworking American family."

Obama's soon-to-be White House chief of staff, Rep. Rahm Emanuel, D-Ill., was present at the meeting, along with Sen. Lindsey Graham, R-S.C. The two -- who successfully negotiated the presidential debates -- are said to have an excellent working relationship and have each other's cell phone numbers on speed dial.

Obama and McCain designated the two as go-betweens for what, one Obama aide later said, "could be the beginning of a great working relationship" for the 2008 presidential rivals.

Sources said the meeting was about fostering an era of bipartisan cooperation that Obama has insisted upon since his victory.

And as the buzz about Obama's Cabinet members continued, so did speculation about Sen. Hillary Clinton, D-N.Y., becoming America's next top diplomat.

One possible roadblock was seen in Bill Clinton's complex web of international business dealings for his personal income and philanthropic endeavors, such as the William Jefferson Clinton Foundation and the Clinton Library. Obama aides are concerned about the possible conflicts of interest those relationships may pose.

With not a little irony, the former president, at the National Bank of Kuwait's annual symposium this weekend, made his first public remarks about his wife possible serving as secretary of state. The 42nd president can command up to $300,000 per speech.

Clinton did not divulge details of his wife's meeting with the president-elect, but did say that "if he decided to ask her to do it and they did it together, I think she'd be really great as a secretary of state." He also added that Hillary did not campaign for Obama "with the hope or expectation of getting any kind of job offer."

But ABC News has learned that the Obama transition team and Clinton's team have made significant progress in this possibly troubling area, with the Clintons willing to hand over some of Bill Clinton's financial information for vetting, and that Obama is increasingly optimistic about the possible partnership, as is Hillary Clinton.

The talk about Clinton being offered the job started last Thursday when she flew to Chicago to meet her former opponent at his Chicago office. The New York senator declined to comment on the issue, saying that all inquiries should be directed to Obama's transition team.

"She is somebody who I needed advice and counsel from. She is one of the most thoughtful public officials that we have. Beyond that, you're not getting anything out of me," Obama said in CBS' "60 Minutes" interview Sunday.