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9 things to watch in the GOP debate

While there will undoubtedly be some interesting moments of television drama during the first GOP debate, here's a checklist of nine topics American voters should be on the lookout for to see where the candidates stand on economic issues:



1. The economic recovery

Our economic recovery is not strong enough, and the improvements in the labor market are painstakingly slow. The quality of new jobs, many of which are low-paying services jobs, represents a stark contrast to the higher-paying manufacturing jobs that once served as the backbone for the middle class.

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This is a major problem that needs to be addressed as soon as possible. I'm interested to see which candidates, if any, take the position that the economic recovery needs to be more balanced and widely distributed. Who agrees that it's the middle class that moves the economic needle, especially in the face of dramatically reduced monetary stimulus? I'm also interested to hear how the candidates would go about achieving the objective of more balanced growth. Will the candidates opt for the status quo, which essentially amounts to "trickle-down economics," or will they be more proactive in pursuit of a more balanced recovery?



2. The Federal Reserve

The Federal Reserve is (and should be) free of Congressional interference in its day-to-day affairs. However, the president appoints Fed members, and the Senate must confirm the appointments. As such, the president and Congress have significant indirect influence in the formulation of monetary policy.

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I will be looking to see which candidates recognize that the Fed cannot be the cure-all for economic weakness. I will also be looking for those candidates advocating more aggressive fiscal stimulus, to include corporate-tax reform, so that the Fed does not have to fight battles alone.


3. Entitlements

New Jersey Governor Chris Christie has already come out to say that he thinks changes are needed to Social Security and Medicare. I think he's exactly right. While I may not agree with his specific plans to make these entitlement programs more solvent, he has the right idea: Ensure the survival of these programs by preserving their solvency. Left in their current form, Social Security and Medicare have the potential to bankrupt the country.

Who else will have the courage to tell this to us straight and propose a solution?

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4. Immigration

We have all seen how a reduction in the absolute number of people working in the economy has dramatically affected the rate of economic recovery over the past six years. If we dramatically reduce immigration, it could have profound implications on the rate of future economic growth.

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In its report, "Immigration: Myths and Facts Behind the Fallacies," the U.S. Chamber of Commerce says, "The immigrant labor force does not replace U.S. workers; rather, it complements the U.S.-born workforce. Immigrants tend to have skill levels at the very high and at the very low end of the spectrum and help create jobs that previously did not exist."

I think that makes sense and am curious to see if any of the GOP debaters do as well.

5. Tax increases

Recently, former Secretary of State Hillary Clinton came outwith a new proposal to nearly double the top tax rate on long-term capital gains.Proposed tax increases such as these are assumedly part of a larger plan toreduce the income/wealth gaps through redistribution of wealth. The Republican candidates, probably acrossthe board, are likely to reject such proposals.

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6. Corporate tax rate

Another issue that may receive unanimous support is the lowering of corporate tax rates. It is obvious to most who operate in the private sector that American companies are less competitive because our tax rates are too high. The question is, though, how should we pay for the lost revenue?

The most popular answer, which most would likely support, is through the closure of loopholes that companies use to lower their individual tax bills. I don't see how anyone would argue with that. President Obama, for his part, has said he'd like to see the passage of the "Buffett Rule," which calls for a minimum tax of 30 percent on individuals making more than a million dollars a year. Do the Republicans agree?

7. Infrastructure

Our infrastructure has been woefully neglected and needs to be addressed. The problem is, how will we pay for it? The American Society of Civil Engineers has said that it could take $3.6 trillion over the next five years just to go from a D+ infrastructure grade to average, and much more to be competitive with the other developed countries. That's slightly more than 20 percent of current U.S. GDP to make our roads, bridges, dams, and tunnels safer. Someone needs to come up with a long-term plan of how to do it. Social Security and Medicare reform must be part of the solution to this problem.

8. Education

I believe one of the biggest issues that needs to be addressed by the next president is the skyrocketing cost of higher education. Tuition inflation is reducing access to college for many young people, and the massive increase in student debt is acting as a major drag on household formation, consumer spending, auto sales, retirement savings, and many other facets of the economy. The root of the problem lies in the ever-increasing limits on government-insured student loans. As long as the federal government keeps raising the amount of money that students can borrow, colleges and universities will keep raising the cost of tuition.

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Tuition inflation has become such a big problem that many prospective students are increasingly questioning whether a college degree is a good investment. This is a big problem, and it resembles the easy-credit expansion that caused the housing bubble.

9. Climate change

Last year was the hottest year on record ever. The Pentagon is calling climate change an "urgent and growing" threat to national security. Extreme weather is costing the country billions of dollars each year in destroyed property, lost productivity, increased insurance premiums, and more. What can be done about it?

Whatever each candidate's decision is, I'll be listening for sound economic support to their solution.



Commentary by Michael K. Farr, president of Farr, Miller & Washington and a CNBC contributor.