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The GOP is blowing it on tax reform

Just as the stock market is signaling its impatience ever more loudly over the still undisclosed Republican tax reform plan, the top GOP tax man in Congress is snapping into action... by consulting with the Democrats.

Ugh.

When will people like House Ways and Means Chairman Kevin Brady and the rest of the Republicans come to terms with two simple facts? First, the GOP owns the majority in both houses of Congress and the White House for a reason, and cutting and simplifying taxes is one of them. And second, bipartisanship just for the sake of chasing a few favorable headlines is a fool's errand.

There would be nothing wrong with Brady, House Speaker Paul Ryan, and Treasury Secretary Steven Mnuchin all working together on a solid tax reform and cut plan, and then working to convince Democrats to vote for it. That's what the White House and the Republicans in Congress did in 1981 with the Reagan tax cut plan, and they actually succeeded in getting dozens of Democrats in the House and Senate to vote for it.

But all reports point to Brady doing something different. That is, following through on a proposal to link GOP tax cut proposals with promises to give Democrats a big say in the formation of a $1 trillion infrastructure spending plan. Oh, and at least partially funding that plan with the expected new tax revenues coming from repatriated corporate cash Uncle Sam would lure back home with much lower corporate tax rates.

Of course, the key words above are "partially funded," as no one thinks the return of taxable corporate funds will produce anything near a trillion bucks to build and repair roads and other pork-barrel projects. And that's why this whole convoluted plan seems like it's already a few hundred billion in the budget hole before it starts.

"Wall Street is indeed getting sick of waiting around. No one in the investment world expected the tax cuts to be in place in the first 100 days, but the Street is looking desperately for some kind of details on tax rate numbers and new rules."

None of this would be necessary if Brady and company would just start operating from a position of strength. Let's help them by clarifying exactly what a majority of Wall Street, Main Street, and everyone in between is looking for on taxes:

First, the public wants marginal tax cuts across the board, especially the middle class. Brady should be out jawboning that idea right now, reminding everyone how the Democratic icon President John F. Kennedy was the first modern president to push for and get the same thing. Then, let today's Democrats come out publicly against JFK's ideas and see where it gets them.

Second, the GOP should invoke another Democratic president's name, and push for returning capital gains taxes to the rate President Bill Clinton cut them to in the mid-1990s before President Obama raised them. Again, let the Democrats explain why reverting to a Clinton policy is a bad idea now.

Third, Republicans should simply call for that corporate tax cut to bring that overseas money back to the U.S. and not make any promises about what to do with that new taxable cash. Just getting that money back on American shores is a simple enough goal to defend, period.

And finally, the GOP should advocate cutting Sub S corporate tax on small businesses too. It's the small businesses that really are the engine for job creation in this country, and that's something the Democrats have been saying for years. Let them defend keeping that sector's taxes high.

These are all sound bite-friendly, strong economic arguments the Republicans should be making 24/7. Instead they're preemptively negotiating against themselves with infrastructure promises and making excuses for delay after delay.

Wall Street is indeed getting sick of waiting around. No one in the investment world expected the tax cuts to be in place in the first 100 days, but the Street is looking desperately for some kind of details on tax rate numbers and new rules. It's been more than two months since I first cited this impatience. Since then, the stock market rally has stalled as very little public progress has been made.

So let's sum up: Brady is wasting time and focus by planning to negotiate with the Democrats before he even has a formulated plan. He and the rest of the GOP aren't using their political majorities and best popular tax cut arguments with the public. And Wall Street's Trump-induced optimism is running thinner by the day. Other than that Mrs. Lincoln, how do you like this show?

Economic policy is about more than numbers and tax tables. It's also very much about projecting confidence and strength. Chairman Brady's latest moves and his entire body of work since the election have produced neither. And his time is running out.

Commentary by Jake Novak, CNBC.com senior columnist. Follow him on Twitter @jakejakeny.

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