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GOP debate comes up short on tax, budget solutions

The next president should slash taxes, cut federal spending, shrink the government and simplify the tax code.

As a crowded stage of Republican presidential candidates squared off for their third debate in Boulder, Colorado, on Wednesday, there was little disagreement among them on the need to implement those policies. But there was a lot less clarity about how each candidate would accomplish those goals.

The debate over federal taxing and spending comes as Congress takes up a critical proposal to break a longstanding fiscal deadlock over the last several years that has posed repeated threats of government shutdowns and, more recently, the prospect of a default by the U.S. government. Capped by a limit on its borrowing authority, the Treasury expects to run out of cash as early as Tuesday unless the so-called debt ceiling is lifted.

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To head off the potential financial chaos unleashed by a default, the House approved a two-year spending deal that is expected to be taken up by the Senate this week. But the deal was roundly attacked by several of the GOP presidential candidates at Wednesday night's debate, including Kentucky Sen. Rand Paul.

The agreement "will explode the deficit; it will allow President Obama to borrow unlimited amounts of money," Paul said. "I will begin tomorrow to filibuster it. And I ask everyone in America to call Congress tomorrow and say enough is enough; no more debt."

In fact, while the deal lifts the debt ceiling until 2017, Congress still has to approve any new spending. And while the plan calls for roughly $80 billion in new spending over two years, Congress must still work out specific spending bills before the latest round of budget authority runs out Dec. 11.

But while the words "tax" and "spend" were spoken more than 100 times in Wednesday's debate, there were few detailed proposals offered on how to prioritize federal spending or reform the tax code. The alternatives proposed were typically vague or simply didn't add up.

Still, some of the ideas floated were extremely simple: Former Hewlett-Packard CEO Carly Fiorina promised that she would reduce the sprawling U.S. tax code to just three pages.

"Three pages is about the maximum that a single business owner or a farmer or just a couple can understand without hiring somebody," she told CNBC's Carl Quintanilla.

Simplicity was at the heart of several candidates' proposals to flatten the tax code to a single bracket, a so-called "flat tax" that has been floated with several variations. Under the plan, every American would pay the same percentage of their income, and deductions and exemptions would be eliminated.

When asked to explain his version of the flat tax, Ben Carson provided a simple, but deeply flawed, calculation.

"If you're talking about an $18 trillion economy, you're talking about a 15 percent tax on your gross domestic product," he said. "You're talking about $2.7 trillion. We have a budget closer to $3.5 trillion."

The difference, he said, could be made up with an additional tax on corporate profits and capital gains on investments.

"You make that amount up pretty quickly," he said. "So that is not by any stretch a pie in the sky."

Unfortunately, that math double counts corporate profits and capital gains income, which are already included in the $18 trillion GDP figure Carson cited. It also overlooks the fact that roughly $3 trillion of GDP represents government spending, which Carson and most of his GOP rivals would like to cut.

"We have 645 federal agencies and sub-agencies," he said. "Anybody who tells me that we need every penny and every one of those is in a fantasy world."

While there were no specific proposals on where to cut federal spending, the candidates tried to lead the pack in their commitment to shrink government.

"Liberty thrives when government is small," said Paul. "I want a government so small I can barely see it."

Early front-runner Donald Trump proposed lowering the tax rate on individuals and corporations and making up lost revenues by taxing the huge pile of offshore corporate profits on the books of American companies seeking to avoid paying U.S. taxes.

"We're reducing taxes to 15 percent," he said. "We're bringing corporate taxes down, bringing money back in, corporate inversions. We have $2.5 trillion outside of the United States, which we want to bring back in."

But the numbers don't add up, according to a recent analysis by the conservative Tax Foundation. Even after factoring in the potential economic growth that might come from lower taxes, the group's recent analysis estimated a $10 trillion budget shortfall over 10 years from Trump's plan.

The group looked at several of the candidates' tax proposals and found that former Pennsylvania Sen. Rick Santorum's tax plan would come up short by $1 trillion; former Florida Gov. Jeb Bush's tax plan would leave a $1.6 trillion revenue gap; Louisiana Gov. Bobby Jindal's plan would create a $9 trillion revenue deficit.

The faulty math was not lost on Ohio Gov. John Kasich, who lashed out early in the debate at the "fantasy tax schemes" proposed by his rivals.

"These plans would put us trillions and trillions of dollars in debt," he said. "Folks, we gotta wake up. We cannot elect somebody who can't do the job. You gotta pick someone who has experience, somebody who has the know-how, the discipline."

Kasich's analysis was quickly dismissed by Trump, who attributed his outburst to low poll numbers.

"His poll numbers tanked; that's why he's on the end," Trump said.