$1.75T Deficit, Higher Taxes, "Bogus" Stimulus: John Mauldin Sees Silver Lining

President Barack Obama formally unveiled his budget blueprint Thursday and predicted the federal budget deficit will hit $1.75 trillion in the current fiscal year, ending Sept. 30.

Obama aims to pay for the orgy of spending largely by increasing taxes on the wealthiest Americans, "the first on high-income earners since 1993 and would reverse a course set by [former President George W.] Bush of lowering the tax burden on the nation's wealthiest people," as detailed by Bloomberg:

• Reinstate the top two Clinton-era tax rates of 36% and 39.6% in 2011, up from the 33% and 35% the richest Americans now pay.
• Raise taxes on capital gains and dividends to 20% for top earners, up from the 15% set by Bush in 2003.
• Additionally, Obama seeks to raise $318 billion to pay for health care reform by reducing mortgage and other tax deductions for households currently paying the 33% and 35% rates, The WSJ reports.
• Raise $210 billion over the next 10 years by "limiting the ability of U.S.-based multinational companies to shield overseas profits from taxation," The Journal adds. "Another $24 billion would come from hedge fund and private equity managers, whose income would be taxed at income tax rates, not capital gains rates."

John Mauldin, president of Millennium Wave Advisors, believes that's a highly unlikely scenario; therefore, more Americans should expect higher taxes in the years ahead to help cover those budget gaps, he says.

Mauldin is "not very sanguine" about the outlook for taxation and calls the recently passed $787 billion stimulus package "bogus" and unlikely to actually stimulate the economy.

Still, the investor and author of the Thoughts from the Frontline e-letter does agree with Barack Obama's pledge: "We will rebuild, we will recover, and the United States of America will emerge stronger than before."

So, assuming they're both right, there is a silver line in this otherwise grim tale.