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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Ron Paul failed to elaborate on the libertarian position on the minimum wage. In a nutshell it's that any increase in the minimum wage makes it more expensive for a business owner to hire {or keep} workers in certain jobs. Mostly entry level positions. If possible, he'll try to figure out a way to either do without these workers or get more productivity out of the ones he has. Otherwise he has to raise the price of his product in a way negating the benefit of the raise the government has mandated.
As more and more entry level jobs disappear the number of chronically unemployed grows.
The government can force someone to pay his employees more; but it can't force him to hire them in the first place!

No money has been set aside to insure solvency off SS. Only IOUs exist. They are future tax obligations.

It’s amazing to me that Republican tactics make any traction at all, anywhere, with anyone. Theirs is a very pat tradition, and should be completely transparent by now (after thirty years): Turn the tables, put the cart before the horse, co-opt, rewrite history, and stay the course. Social Security is a Ponzi scheme? This isn’t the first time that legitimate Democratic criticisms have been redirected to confuse an issue and distort reality, or vilify government in general. It is the height of audacity that the financial industries (and their conservative cohorts in Congress) should demand (authorize) a government bailout and then blame government (S.S.) for the financial crisis. With Republicans, there seems to be no regard for either ideological or historical consistency (note Reagan’s claim that “government is the problem” in the 80’s; then, in the wake of ’08, the claim became “government failed to regulate”; that is, lack of government was the problem). Never mind the fallacious reasoning, to neo-cons, government is always the problem, as are liberals, progressives, social democrats, and anyone who isn’t a member of the John Birch Society.

How can you focus the question on the term ponzi scheme? Obviously it was used for political impact and viewer recognition. Clearly there is not enough funds to pay all participants....I think the phrse Ponzi scheme fits the moment reasonably well, gets the point across, and summarizes the disasterous handling of Social security!

There was a lot of talk about states rights, particularly from Perry and Cain - but there was very little discussion of the specifics of how states would make better policy see my take: http://wp.me/p1cCQg-2N

I didn't know Jethro Clampett was Governor of Texas! Good on him! Well he wiped the floor with them city slickers last night. Just goes to show you, in the GOP, and especially in Texas, getting all the way through 6th grade makes you the smartest guy in the room!

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