Skip to main content

If there's one thing missing from Republican presidential candidate Ben Carson's economic agenda, it's details. 

Carson's most widely discussed economic policies: establishing a balanced budget, reducing the deficit, replacing the Affordable Care Act, and implementing a flat tax rate, have sounded grandiose, but the lack of specifics on how he would accomplish these ideas hasn't stopped him from becoming the frontrunner in the GOP race for president.

According to the latest CBS News/New York Times poll, Carson is leading the large pack with 26% compared to Trump's 22% with Florida Sen. Marc Rubio in third place with 8%.

"I want more details and answers," said Doug Holtz-Eakin, president of the right-leaning American Action Forum. "We've seen what uncertainly does to the economy. So if he wants to genuinely have a good performance, he needs to lay it out so people know what to expect."

Whether the soft-spoken, retired pediatric neurosurgeon, who has never held a public office, is vague because he's new to politics or it's his political strategy -- millions of Americans will be watching the third Republican debate Wednesday night focused solely on the economy, where he will be asked to explain how he plans to tackle economic issues from jobs, to health care, taxes, retirement, and trade.

Carson, a Seventh-day Adventist, is running his campaign as an "outsider" to Washington and using his faith in God to not only capture the support of evangelicals and appeal to the party's religious base, but to shape his economic policies as well.

That might be the most concrete position in Carson's campaign: his faith. And it seems to be working, as more voters are connecting with the 64-year-old Detroit native.

Should we have "faith" in Carson's economic policies? Here's a closer look at what the U.S. economy might look like under a Carson administration (assuming, of course, that he could pass his agenda through congress, a tall order in this era of gridlock): 

Biblical Tax System, IRS Abolished

The Bible said, "Make an offering of ten percent, a tithe, of all the produce which grows in your fields year after year."

If you aren't familiar with this scripture found in the Old Testament at Deuteronomy 14:22, you may need to get familiar with it if Carson is elected President. He has said that he plans to change the tax system to be a flat tax of 10%-to-15%, much like tithing in church. Tithing is a biblical reference of providing one-tenth of your income to God.

"We need a significantly changed taxation system," he said during the Republican debate in Cleveland. "And the one that I've advocated is based on tithing, because I think God is a pretty fair guy."

Carson's other goals are for Americans to complete their tax forms in 15 minutes and to abolish the IRS. To do this, he plans to accomplish this by proposing a proportional tax system where the wealthy and the poor are taxed at the same rate. He said, because of the simplicity of this tax system, the Internal Revenue Service will be unnecessary.  

"You make $10 billion, you pay a billion. You make $10, you pay one. And everybody gets treated the same way," he said at the Republican debate. "And you get rid of the deductions, you get rid of all the loopholes."

But Holtz-Eakin, a former head of the non-partisan Congressional Budget Office, said Carson keeps talking about the tax rate, but doesn't explain what the rate will be applied to.

Scroll to Continue

TheStreet Recommends

"The rate is perhaps the least interesting thing," said Holtz-Eakin. "What really matters is what the 10% applies to. The question is: what is it that he is going to exempt from tax?"

Personal income tax, made up nearly 42% of the 2014 federal receipts, according to the Congressional Budget Office.  

If Carson's 10 percent flat tax is implemented, the Citizens for Tax Justice, a progressive think tank, estimates that the deficit would increase by $3 trillion in only one year because his plan would only bring in revenue of $1.1 trillion or 32% of the receipts from our current tax system. The think tank also estimates taxes would rise by nearly $3,000 on 95% of taxpayers, while reducing taxes by almost $200,000 for the wealthiest 1%. The government spends 17.5% of GDP.

But Carson hasn't been specific about whether he would include all income, capital gains or what he plans to do with corporate taxes.

In an interview with CNBC, Carson said he wanted the U.S. to be a tax haven for corporations. A six-month tax holiday would be given to corporations bringing their money overseas back, where the monies wouldn't be taxed, but he would take 10% of the money to create jobs for impoverished or unemployed people in poor areas within major cities. 

Kyle Pomerleau, economist for non-partisan Tax Foundation, said he doesn't believe the tax holiday would have a positive impact on the economy. 

"It will really just be a windfall for shareholders and the companies," Pomerleau said. "They are just pretty much going to get a bunch of free cash that is going to be taxed at a lower rate."

Carson also suggested that the corporate tax rate would decrease to between 15% and 20%, which Pomerleau argues would bolster the economy.

Another tax on Carson's radar is the so-called luxury tax on expensive items. In a Forbes interview, Carson said this tax, "provides an opportunity for the wealthy to pay down the national debt, since all money collected for luxury items would be directed to that purpose." While we don't know how much this tax would add to federal revenue, some economists say the luxury tax is "unproductive and unwise" as it hinders job creation. 

ObamaCare Out, Health Savings Accounts In

As for Obamacare, Carson has gone as far as to equate the Affordable Care Act to slavery.

"You know Obamacare is really I think the worst thing that has happened in this nation since slavery," he said at the Values Voter Summit in Washington in 2013. "And it is in a way, it is slavery in a way, because it is making all of us subservient to the government, and it was never about health care. It was about control."

But he said U.S. citizens can regain control of their health care decisions with health saving accounts, better known as H.S.A.s. In a 2013 article, he wrote:"Even if the federal government provided such an account for every American citizen that was increased by $2,000 each year, it would cost less than $700 billion a year and everyone would be covered."

Pomerleau said that Carson's plan wants people to be more sensitive to the actual cost of health care. "There's an idea that when people are more sensitive to the cost, they'll make better decisions about their health care, this will drive prices down, and it will also make sure that people aren't over-consuming on health care," he said.

Carson proposes that every American receive $2,000 in their account each year, through the government or their employer. Under his plan, employees would have no limits on how much they could contribute and a quarter of the money would be spent on "bridge insurance or catastrophic insurance." The monies could accumulate, be transferred between family members and eventually be used for retirement.

A 2012 study found that in the first year that consumers had H.S.A.s plans they spent 21% less and we would see a decline of nearly $57 billion in health care costs if half of the employer-based plans were switched to health savings accounts. 

Steve Wojcik, vice president of public policy at the National Business Group on Health said that employer sponsored care and coverage is valued by employees, so whatever the plan, the candidates should make sure this benefit is preserved. Wojcik said his organization agrees that portions of the Affordable Care Act should be repealed and that H.S.A.s should be supported. 

Wojcik said, from his understanding of Carson's plan, health care providers could benefit, if people had the money from the government to pay for their costs, but it wouldn't have any major affect on health insurance companies because many companies have already moved to H.S.A.s. 

There would need to be a change to how H.S.A.s work today. According to the IRS, H.S.A.s are only for "high deductible plans" of no less than of $1,300 for self and $2,600 for family coverage, and the most you can contribute to the accounts is $3,350 for self and $6,650 for family.

Most people would need to have the extra money to save in order to contribute to their H.S.A. above the $2,000 that the government would provide. 

It is unclear how such a sweeping change to how health care operated would affect the economy. 

Balanced Budget Amendment, Entitlements Cut?

If Carson is elected, he will introduce a constitutional amendment to balance the budget. In a Marketplace interview, Carson said, "If we simply refuse to extend the budget by one penny for three to four years, you got a balanced budget. Just like that."

He told interviewer Kai Ryssdal, that he would decrease the budget by not replacing the thousands of federal employees who retire every year and he would ask department heads to cut their budgets by 3%-to-4%.

"Now anybody who tells me there's not 3 to 4 percent fat in virtually everything that we do is fibbing to themselves," Carson said in the interview. 

The government has already attempted to put caps on discretionary spending, through sequestration, but Holtz-Eakon said the government is struggling to get rid of these caps and Carson's plan would be hard to implement. 

"No. 1: we have a little bit of history on this and we know it's going to be hard," said Holtz-Eakin. 

Essentially, this balanced budget amendment would mean that the government would have to operate on the money collected through taxes and could not borrow monies to fund the government.

To achieve this balanced budget, Carson proposed to abolish Medicare, a program at benefits 49 million seniors, and Medicaid. The health savings accounts would replace these programs and the government would fund $2,000 into those account from birth, as he suggested.

Trump recently slammed Carson's plan, saying on MSNBC's Morning Joe, "Abolishing Medicare, I don't think you're going to get away with that one. It's actually a program that's worked. It's a program that some people love."

Carson has since retracted his ideas to abolish these safety net systems, acknowledging that he has spoken with more economists and changed his mind. 

Carson may have realized his political career could be in jeopardy if he continues down that path, but he is a proponent of gradually raising the age of when Social Security benefits are disbursed. 

However, defense spending, which takes up nearly 18% of the federal budget, is not on the table to be cut, because, he says, the U.S. has so many threats and enemies. "Cutting defense, that's idiotic at this time," he said in a Washington Examiner interview.

The Washington Post estimates that under Carson's plan, with the flat tax rate and the balance budget, 72% of the budget would be reduced equating to the elimination of spending on food stamps, the military, Social Security, Medicare, and Medicaid.

Increase in Minimum Wage

Minimum wage has been a major discussion on the Democratic platform, but there is no real discussion on the Republican stage because most candidates don't support an increase in the minimum wage. This is where Carson differs.  While, he doesn't tout increasing minimum wage as a major item on his agenda, Carson said in a interview with CNBC's John Harwood, "I think, probably, it should be higher than now."

During the Republican debate in September, he suggested that the minimum wage should automatically index to inflation, but be tiered so that younger adults will be paid less. 

"I think we also have to have two minimum wages, a starter and a sustaining," he said during the debate. "Because how are young people ever going to get a job, if you have such a high minimum wage that it makes it impractical to hire them?"

The current minimum wage, which has only been increased one time in two decades, is $7.25.  The Obama administration has proposed raising the minimum wage to $12 by 2020. The Congressional Budget Office found that if the minimum wage was increased to $10.10, 24.5 million workers benefits from the raise, however 500,000 employees would be out jobs, and the net increase to real income for families would be $2 billion. 

Because Carson hasn't released a formal, concrete plan, it's not clear what he will do with wages once he's in office, but at least he's thinking about it.

The next Republican Presidential debate starts at 8 p.m. ET this Wednesday, 10/28, but will be covering it all week! Tune in for stories, videos, and more, and make sure to follow us at @TheStreet on Twitter for live commentary during the debate.

Image placeholder title