The right debate to have over “We Built It”

It’s too much to ask, I know, but the speeches Tuesday night at the Republican National Convention left me hungering for a real exploration of the role government plays in helping U.S. businesses.

The unifying theme of the speeches, at least in theory, was “We Built It” -- a declaration of solidarity with the entrepreneurs who create businesses without the government’s assistance. To underline that point, the giant screen inside the Tampa Bay Times Forum showed the occasional video featuring a selectively edited version of one of President Obama’s stump speeches. “Let me tell you something,” Obama is heard to say, “if you’ve got a business -- you didn’t build that.”

By “that,” the president appeared to have been referring to the infrastructure, schools and other elements of the “unbelievable American system” that supports commerce and the economy -- antecedents that were excised from the recording. But the GOP doesn’t need to resort to hyperbole to point out real differences between its position and Obama’s on the relationship between Washington and “job creators.”

COMMENTARY AND ANALYSIS: Presidential Election 2012

Underlying Obama’s “you didn’t build that” comment was his argument that the federal government shouldn’t curtail spending on infrastructure, education and other priorities he likes to refer to as “investments.” This ties into the debate over how to fix the fiscal mess in Washington. Obama’s plan includes tax increases not for their own sake, but for the sake of keeping federal spending at a higher level than his GOP opponent, former Massachusetts Gov. Mitt Romney, favors. The difference is roughly $6 trillion over a decade.

Granted, only a portion of that gap represents the amount Obama would spend on highways, Pell Grants, clean energy and other pursuits that Republicans have proposed to cut back. Nevertheless, the split over budgets reflects a profound disagreement -- rhetorically, at least -- over the value of public-sector spending. Obama argues that these sorts of investments promote economic growth; Romney contends that a more straightforward route to a healthy economy is to shrink the federal government and reduce the tax burden.

A second area of sharp disagreement is federal regulation. Obama and his Democratic allies in Congress have used Washington’s regulatory power to reduce the number of people with insufficient or nonexistent health insurance, deter the sort of dice-rolling that caused Wall Street to collapse in 2008, reduce air and water pollution and curb the demand for fossil fuels. Republicans, by contrast, focus more on the costs of these policies in the short term than the projected benefits over the long term. They also favor market-based mechanisms over prescriptive rules, arguing that the former are less costly and more effective.

A good example is the debate over “too big to fail” financial institutions. The law that then-Sen. Chris Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.) steered through Congress in 2010 includes elaborate rules for banks’ investments, the “living wills” they must prepare, the financial reserves they must hold and numerous other provisions designed to avert more bailouts. Republicans want to scrap Dodd-Frank in favor of, err, they haven’t said what, exactly. But some of the ideas floated include a simpler set of tough capital requirements that make it too expensive for a bank to be too big to fail, or a return to the structural separations that once barred depository institutions from engaging in Wall Street trading.

Those two areas of disagreement are real and fundamental, unlike the faux controversy and manufactured outrage that “We Built It” relies upon. And here’s a third, potentially: whether the government should aid businesses directly through tax preferences and subsidies.

I say “potentially” because both Obama and Romney have talked about the need to simplify the tax code by eliminating some “tax expenditures,” which is budget-speak for deductions, exemptions, credits and other forms of tax breaks. And yet neither one seems truly committed to the idea; Romney, for example, favors a permanent credit for research and development and a lower rate for capital gains, and Obama has called for targeted credits for a variety of industries and employers.

By the way, the billions of dollars worth of tax subsidies and other direct aid to businesses undermines the GOP’s “We Built It” meme. Ironically, at least three of the speakers at the GOP convention Tuesday had received significant amounts of direct help. One, in fact, took the stage to complain that the Obama administration had made it harder for him to draw from the federal trough.

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Follow Jon Healey on Twitter @jcahealey