A 40- (b) billion-dollar, two-year package to stimulate the faltering economy, and personal income tax cuts highlight the Conservative government’s life or death fourth budget.

But the moves won’t come cheap.

Finance Minister Jim Flaherty projects Canada will run up a massive total deficit of almost 85 (b) billion dollars over five years — wiping out most of the national debt repayment Canadians have managed over the past decade.

Flaherty is mainly targeting low- and middle-income Canadians with 20 (b) billion dollars in total tax relief over this fiscal year and the next five years, more than half of that in income tax reductions.

There is also a new, one-time home renovation tax credit of up to one-thousand-350-dollars in an effort to get people spending and create demand for construction jobs, and another 300 (m) million for home energy retrofits.

There are also changes to Employment Insurance, including a freezing of premiums and a five-week extension in benefit payments — both good for two years.

And there is more retraining for unemployed workers.

There will also be options explored to allow self-employed Canadians to qualify for maternity and parental benefits under the E-I program.

Flaherty is also taking steps aimed at giving Canadian consumers and businesses more access to credit — including a 12- (b) billion-dollar fund to help support the financing of equipment and vehicles.

The government is also moving to thaw the frozen credit market by investing another 50 (b) billion in the Insured Mortgage Purchase Program in the hope banks will make that amount available for loans.

The budget forecasts are not positive for this year, however, with Flaherty projecting a 2.7 per cent decline in economic growth — even lower than private sector predictions.

But he is predicting a quick rebound for next year and 2011.