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Trump held tax reform hostage, and the GOP paid the ransom

  • President Trump is holding tax reform hostage in favor of the health bill.
  • Republicans in Congress have basically paid his ransom.
  • This is all because the GOP is just as confused as Democrats about their proper role in government.
President Donald Trump speaks while flanked by House Republicans after they passed legislation aimed at repealing and replacing Obamacare, during an event in the Rose Garden at the White House, on May 4, 2017 in Washington, DC.
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President Donald Trump speaks while flanked by House Republicans after they passed legislation aimed at repealing and replacing Obamacare, during an event in the Rose Garden at the White House, on May 4, 2017 in Washington, DC.

Are you watching the stunning kidnapping and ransom payment taking place on Capitol Hill right now? You are as long as you're following the so-called Obamacare repeal efforts and the subsequent White House tax reform plans.

The biggest losers in this drama are the conservative Republicans in the House of Representatives. Most of them were just convinced to pay a ransom in the form of voting for a fundamentally flawed Obamacare replacement bill in return for getting what looks like a seat at the table in the tax reform process.

With GOP majorities in the House and Senate and control of the White House, that seat should have been there in the first place. Somehow, the Freedom Caucus Republicans allowed it to be swiped away from them and had to pay up to get it back.

Their woes only start there. Conservative purists correctly point out that the new bill keeps the price-hiking subsidies and minimum requirements of Obamacare. And liberals are now portraying the bill as a giveaway to the rich that will leave a sizable amount of Americans without coverage and then allow them to die. Warren Buffett even parroted that point Monday morning, saying the Republican health-care bill will "cut the hell out of taxes" for the rich.

Oh the irony. The Republicans in the House begrudgingly voted in favor of a bill that basically preserves all the key elements of Obamacare for the chance to cut taxes and unleash the economy. And now the Democrats and the world's number one investor are painting the flawed bill not just as a big tax cut, but an evil one at that. This entire health bill ransom payment capitulation is turning out to be a preemptive GOP strike against itself.

"Warren Buffett even parroted that point Monday morning, saying the Republican health-care bill will 'cut the hell out of taxes' for the rich."

There are two very important causes of this mess. First, the Republicans seem to keep forgetting that health care makes up anywhere from 17 to 20 percent of the American economy. Freeing up this massive chunk of what every American individual and business has pay for would do much more than income tax cuts in the fight for growing the economy and reversing government intrusions on freedom.

Second, too many Republicans think their primary reason for governing is to boost the economy. That's a nice goal, but it's the free market's job to do that. What Republicans and Democrats are supposed to be doing is defending our freedoms and liberties as enumerated in the Constitution and inspired by the Declaration of Independence.

Conservatives routinely excoriate Democrats for trashing the Constitution in favor of more statist control. But who's calling out the GOP in Washington for supporting tax cuts simply to further their own form of centrally planned economic growth?

Of course President Donald Trump and the rest of the Wall Street gang at the White House, including Treasury Secretary Steven Mnuchin and White House Chief Economic Adviser Gary Cohn, are just as confused about all of this.

They've dangled issues like tax reform and judicial nominations in front of the conservatives in Congress and the conservative voting base since then-candidate Trump secured the GOP nomination.

At least in the case of the judiciary, President Trump has delivered with Justice Gorsuch's confirmation to the Supreme Court and the new list of White House nominees to lower courts. But with the tax reform bill not even written yet, too many Republicans have paid a huge health care bill ransom without even getting evidence their kidnapped loved one is still alive.

This is not to ignore the overwhelming odds that the existing health insurance bill will be significantly modified in the U.S. Senate. In fact, it will have to be to have any chance of getting even the bare minimum of 51 votes.

After what we've seen from the Republicans in Congress and the White House so far, it's more likely the upper chamber's version of the bill will include more deficit spending and government intrusion.

All of this is the result of a fact not enough people have recognized since Donald Trump won the GOP primaries so convincingly last year: He's basically a third party president.

Republicans are willing to play along with the outsider in favor of some common ground promises and because this president at least shares their same official party label.

The downside of that kind of deal is that it leaves the GOP vulnerable to paying the price for backing bills and policies they don't subscribe to in the first place.

Now they'll find out in 2018 and 2020 if making that deal and paying that ransom was really worth it.

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

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.