The Republican debate: Social Security and minimum wage

Texas Gov. Rick Perry and U.S. Rep. Ron Paul debate during the Republican Presidential Candidates debate at the Ronald Reagan Presidential Library September 7, 2011 in Simi Valley, Calif.

Jeremy Hobson: President Obama will lay out his big job creation plan tonight when he addresses Congress. Last night, we heard from the Republicans hoping to replace the president after next year's election.

We're going to dig into some of the economic ideas that came up in the Republican debate now with our economics correspondent Chris Farrell. Good morning, Chris.

Chris Farrell: Good morning, Jeremy.

Hobson: So, let's start with jobs. There was a lot of talk about the minimum wage and its impact on jobs. Here is Politico's John Harris asking a question of Congressman Ron Paul.

John Harris: Do you advocate getting rid of a minimum wage? Would that create more jobs?

Ron Paul: Absolutely, and it would help the poor -- the people who need a jobs. The minimum wage is a mandate, we're against mandates, so why should we have it? No, it would be very beneficial.

Hobson: Well, what about that Chris? Would getting rid of the federal minimum wage do something for job creation?

Farrell: Well I think for a long period of time, many economists -- conservative economists -- have been against the minimum wage. It makes it more expensive to hire labor, particularly your less skilled labor. The youth unemployment rate is very high. If you get rid of the minimum wage, so the argument goes, that would help the young. The counterattack is, less skilled workers aren't being hired. If a company is hiring, it's hiring for skill workers, it's hiring for education. So getting rid of minimum wage would not make much of a difference at all.

Hobson: All right well let's turn to Social Security, that was a big issue last night. And here is Gov. Rick Perry with his quite controversial views on Social Security.

Rick Perry: It is a Ponzi scheme. To tell our kids that are 25 or 30-years-old today, "You're paying into a program that's gonna be there." Anybody that's for the status quo with Social Security today, is involved with a monstrous lie.

Hobson: A monstrous lie, a Ponzi scheme -- Chris, when I hear Ponzi scheme, I think Bernie Madoff. Is Social Security a Ponzi scheme?

Farrell: No. There are real workers, there's real wealth, that are backing backing Social Security. So no, it is not a Ponzi scheme, and there's a lot of money that's been set aside to help pay as you go down the road. However, Social Security over time does need some changes. Not a Ponzi scheme, but the status quo can't stay the same either.

Hobson: Marketplace economics correspondent Chris Farrell, thanks so much.

Farrell: Thanks a lot.

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