The debate, co-sponsored by the Fox News Channel and the South Carolina Republican Party, kicked off with a question on whether the United States is headed for recession, USA Today reported.
"Could we be headed for a recession? Absolutely. Do we need to be? Absolutely not," said former Massachusetts Gov. Mitt Romney.
To avert an economic downturn, taxes should be reduced on middle-income Americans, Romney said in the debate leading up to the Jan. 19 South Carolina primary.
Former Arkansas Gov. Mike Huckabee, who won last week's Iowa Republican caucuses, said now is not the time to raise taxes.
Texas Rep. Ron Paul was the only candidate to say he believes the United States is in a recession.
"I believe it's going to get a lot worse," the Texas congressman said.
On the growing federal deficit, Arizona Sen. John McCain said government spending needs to be curbed. McCain, Tuesday's winner in New Hampshire, pledged to "wield the veto pen" and block pork-barrel projects sought by individual lawmakers.