'This Week' Transcript: Sen. Rand Paul and Sen. Charles Schumer

UNIDENTIFIED FEMALE: You can keep your insurance if you like it.

ZELENY: For Democrats, income equality is a new rallying cry and will be a central theme of the State of the Union Address with the president calling for an increase in the minimum wage.

(END VIDEOTAPE)

ZELENY: As for Republicans, they may have a stronger political hand if they can refrain from fighting one another. Party leaders tell me they still worry those simmering feuds with the Tea Party could be the biggest thing standing in the way of winning those six elusive seats and taking control of the senate -- George?

STEPHANOPOULOS: OK, Jeff, thanks very much.

And with that, let's get to one of GOP's rising stars, got his foot in both camps, Senator Rand Paul of Kentucky.

Senator Paul, happy new year to you, thank you for joining us.

PAUL: Good morning.

STEPHANOPOULOS: You guys are going to begin right away this week with that fight over extending benefits to the unemployed. President Obama in his weekly address yesterday said it's cruel to deny those benefits. He wants a vote right now. And the House Speaker John Boehner says he's open to it if the benefits are paid for.

Now I know you have been opposed to the extension in the past, but if Speaker Boehner's conditions are met, can you support the extension?

PAUL: Well, I think what's really cruel is to have an economy that doesn't have jobs in it. So we have to talk about what policy creates jobs. With regard to unemployment insurance, I've always said that I'm not opposed to unemployment insurance, I am opposed to having it without paying for it.

I think it's wrong to borrow money from China or simply to print up money for it. But I'm not against having unemployment insurance.

I do think, though, that the longer you have it, that it provides some disincentive to work, and that there are many studies that indicate this. So, what I've been saying all along, we have to figure out how to create jobs and keep people from becoming long-term unemployed. That's why I promoted the economic freedom zones which would dramatically lower taxes in areas where there's long-term unemployment.

STEPHANOPOULOS: But are you saying now that if this extension is paid for, you can support it?

PAUL: Well, what I have always said is that it needs to be paid for, but we also need to do something for long-term unemployed people, and that is, we need to create something new that creates jobs. So, what I would like to do, when we get back, is one, if we extend it, we pay for it. But, two, we add something to it that would create jobs. And so what I have been promoting are economic freedom zones, which any area that has unemployment one-and-a-half times the national average, we would dramatically lower taxes to try to spur and stimulate the economy there and create jobs.

STEPHANOPOULOS: Another big issue, this controversy over the NSA. You announced on Friday that you're going to be filing a class-action lawsuit against the surveillance program. Now this issue is already making its way through the courts. Two federal judges have already weighed in on it, so why is this lawsuit necessary?

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