ARI SHAPIRO, HOST:
Let's take a closer look now at what the candidates said in last night's Republican presidential debate. There were a lot of claims and counterclaims. We're going to break it down.
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UNIDENTIFIED MAN: Where's the beef? When I hear your new ideas, I'm reminded of that ad - where's the beef?
SHAPIRO: NPR's Scott Horsley and Danielle Kurtzleben are here. Hey, guys.
SCOTT HORSLEY, BYLINE: Good to be with you.
DANIELLE KURTZLEBEN, BYLINE: Hello.
SHAPIRO: Let's start where the moderators at the Fox Business Network debate did - with the economy. Here's Texas Sen. Ted Cruz.
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TED CRUZ: The millionaires and billionaires are doing great under Obama, but we have the lowest percentage of Americans working today of any year since 1977.
SHAPIRO: Scott, is that true?
HORSLEY: You know, the Republicans are trying to take some of the wind out of the sails of the Obama economic recovery. So while the president brags about bringing unemployment down to 5 percent, folks like Ted Cruz talk about what a relatively small portion of the population's actually working.
SHAPIRO: But is that a small proportion because baby boomers have retired, or is it a small proportion because people can't find jobs?
HORSLEY: Well, there's two things happening here. One is the percentage dropped really sharply during the recession. It's, by some measures, made a modest rebound, but it's still low by historical standards. And there's a lively debate in economic circles whether that low participation rate right now is demographic or a sign that workers are discouraged.
SHAPIRO: Let's stick with economic questions. Sen. Ted Cruz came under attack from Sen. Marco Rubio for Cruz's tax plan, which involves a 16 percent tax on businesses. Now Rubio says this plan has a value-added tax on all goods services, known as a VAT. That's really common in Europe. Here's Cruz's defense.
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CRUZ: The problem is the business flat tax in my proposal is not a VAT. A VAT is imposed as a sales tax when you buy a good. This is a business flat tax.
SHAPIRO: Danielle, what is the difference between a business flat tax and a value-added tax, or a VAT?
KURTZLEBEN: That's a great question. It's a question a lot of people are asking after yesterday's debate because he seems to be doing some funny things with definitions. I mean, a value-added tax is - as its name would suggest, it taxes a business on the value it adds to the products it makes. A very common way this is explained is by using a baker. If I spend 50 cents on the flour that I used to make a loaf of bread, and I sell that loaf of bread to you for $2, I have added a $1.50 in value.
SHAPIRO: Oh, so that's what you're taxed on as a VAT. What about a business flat tax?
KURTZLEBEN: Well, Ted Cruz says he would be taxing businesses on their net business sales, which he defines as the money they take in from sales minus their expenses and their capital expenditures, which sounds an awful lot like the definition of a VAT.
SHAPIRO: If this is a distinction without a difference, Scott, why are they fighting over this?
HORSLEY: You know, VAT taxes are widely used in the developed world, but they're pretty unpopular in this country. Democrats are concerned that they tax the poor, that they're regressive. Republicans don't like them because they can raise a lot of money and fund big government. Supporters joke that America will finally adopt a VAT tax when Republicans figure out that they're regressive and Democrats figure out they can raise a lot of money and fund big government.
SHAPIRO: OK, let's shift from the economy to gun control. Of course, this took place in South Carolina, where there was this horrible shooting in Charleston last year. The suspect, Dylann Roof was able to buy a gun when he shouldn't have. Here's what former Florida Gov. Jeb Bush said about that.
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JEB BUSH: The FBI made a mistake. The law itself requires a background check, but they didn't fulfill their part of the bargain within the time that they were supposed to do.
SHAPIRO: Danielle, is that story accurate?
KURTZLEBEN: Yes, and the FBI has admitted as much. They have three days to decide whether a person should or should not get that gun. The information that would have flagged him in that background check - Dylann Roof had admitted to possession of a drug - that information did not make its way to the FBI examiner who was doing the check for a number of reasons. And therefore, after those three days, he was able to go get the gun.
SHAPIRO: Let's end with the detention of 10 U.S. sailors by Iran earlier this week, which Chris Christie says is partly because of U.S. defense spending cuts under President Obama. Let's listen.
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CHRIS CHRISTIE: We need to rebuild our military, and this president has let it diminish to a point where tin-pot dictators like the mullahs in Iran are taking our Navy ships.
SHAPIRO: Scott, does defense cuts have anything to do with the detention of the U.S. sailors?
HORSLEY: You know, Ari, there's no question those TV pictures of Americans on their knees with Iranian captors are powerful, and Republicans are trying to capitalize on this. There is historical precedent. Republicans do well when Americans are held hostage by Iran. But this story just fell short of the Jimmy Carter precedent. Those sailors were released in about 14 hours. It is true that defense spending has gone down on Obama's watch from the peak in 2010, when the wars were at their height. It's rebounded a little bit under the most recent budget agreement. It's hard to see though, how defense spending ties into what happened at the Persian Gulf this week, unless you're thinking maybe we should invest in some better navigational equipment.
SHAPIRO: That's NPR's Scott Horsley and Danielle Kurtzleben breaking it down for us. Thanks, guys.
HORSLEY: Good to be with you.
KURTZLEBEN: Thank you. Transcript provided by NPR, Copyright NPR.
