Pelosi: Everything should be on the table to reduce federal deficit

House Minority Leader Nancy Pelosi (D-Calif.) on Monday agreed that everything should be put on the table in an effort to reduce the deficit, including entitlements like Medicare and Social Security.

"Yes," she said in a CNBC interview in New York, when asked whether entitlements should be a part of the deficit solution.

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"I think Medicare is on the table. I think Social Security is probably on its own table, because we have to have it be solvent, it has to be strong, and we have to deal with it in its own mechanism, in my view. But the fact is, all the money is fungible, and at the end of the day, the deficit must be reduced," the House's most powerful Democrat said.

House Democrats favor fixing Social Security by raising the cap on payroll taxes rather than cutting benefits. President Obama has proposed reducing Medicare costs by strengthening the ability of the Independent Payment Advisory Board to restrict payments, instead of turning it into a voucher system. Pelosi was more general in her comments today to CNBC.

"We all know we must reduce the deficit," Pelosi said. "We've been in this place before, and we've reduced the deficit. We must reduce the deficit. We must put everything on the table. We've got to look at cuts for sure, waste, fraud, abuse, duplication, obsolescence."

Reoublicans, however, seized upon Pelosi's "on the table" remark.

Shortly after the interview, the National Republican Congressional Committee sent out an email titled "That's What She Said: Pelosi and Dems Willing to Cut Seniors' Medicare."

On House Majority Leader Eric Cantor's (R-Va.) blog, Cantor spokesman Brian Patrick characterized Pelosi's remark as indicating "a stark flip."

"Today on CNBC, Democrat Leader Pelosi declared Medicare to be 'on the table,' just a month after instructing Democrats to ignore Medicare’s insolvency. This is quite a stark flip, and a hopeful sign that Democrats are finally starting to realize that in order to preserve Medicare for future generations, reforms are needed," Cantor said.

Pelosi, however, qualified her statement later in the day in an interview with Bloomberg TV, voicing a position in line with the president's and saying that what was "on the table" were some possible changes to Medicare funding.

"One suggestion we're not open to is the abolishment of Medicare and that's what the Republicans have put forth in their budget and we do not support that," Pelosi said to Bloomberg TV.

Calling the Republican email  a "pathetic attempt" to draw attention away from Rep. Paul Ryan's (R-Wis.) plan, which has come under fire for changes it recommends to Medicare, Pelosi's press office issued a statement.

"Leader Pelosi opposes any Republican plan that ends Medicare as we know it," the statement said. The Democrats repeated that they would look for ways to cut waste, fraud, duplication and obsolescence from the current Medicare system.

The exchange of salvos marks the latest skirmish on Medicare in the ongoing dispute over how to trim the deficit.

Pelosi, on CNBC, added that higher taxes on oil companies should also be part of the solution. When asked why Democrats want to eliminate tax benefits that oil companies and other companies get, she said oil companies should not be treated the way manufacturers are treated for tax purposes.

"They shouldn't be, because manufacturing is making something in America," Pelosi said. "This was a, shall we say, a special case for the oil companies to say 'we are not actually manufacturing companies, we want to be treated like that.'"

"Let's not cry over the oil companies having $32 billion," she added, noting that the big five oil companies recorded more than $30 billion in profits in the first quarter of 2011.

Pelosi also said she supports lowering the corporate tax rate, but only after closing down what Democrats have called "loopholes" in the tax code that allow for various personal and corporate deductions. "Shut them down so you can lower the corporate rate," she said.

She added that she and other Democrats, including Rep. James Clyburn (D-S.C.) and House Budget Committee ranking member Chris Van Hollen (D-Md.), were in New York this week to talk with finance leaders about how to best reduce the deficit.

Pelosi said Speaker John Boehner's (R-Ohio) preference for only raising the debt ceiling in return for steep spending cuts is "interesting," but said it remains to be seen whether that means other Republicans would support an increase in the debt ceiling. 

On other issues, Pelosi said Democrats support increased oil drilling along the lines of what President Obama outlined over the weekend.

"This is what we've been for for a long time," she said. "He's articulating it. We have to have increased domestic production of everything."

When CNBC Host Larry Kudlow said he is "surprised" by her comments on drilling, Pelosi said the Democratic position has been mischaracterized. "You're used to how other people characterize our position," she quipped. "Thank you for asking what it is."

Updated at 4:38 p.m.