After months of speculation, Finance Minister Jim Flaherty tabled a federal budget on Tuesday that is big on income tax cuts and even bigger on deficits.

Flaherty's spending plan includes $40 billion in economic stimulus over the next two years in the form of infrastructure spending and tax cuts.

The budget comes at a massive cost -- $85 billion in deficit over the next five years. The deficit in the 2009-2010 fiscal year will be a shade under $34 billion.

The budget is remarkably different than any other one proposed by the Conservatives under Prime Minister Stephen Harper -- with massive government spending on everything from roads, social housing to the arts.

"We must do what it takes to keep our economy moving, and to protect Canadians in this extraordinary time," Flaherty said. "Making new investments is more challenging in such a time; but it is also more necessary than ever."

If all goes according to Flaherty's plan, the government estimates about 190,000 jobs will be created or saved, and the economy will grow by 1.0 per cent over the next two years.

Flaherty told CTV's "On the Hill" that Canadians across that country have told him they want government to be pragmatic -- and do what it needs to do to protect Canada from a global recession.

"And the same time we heard, 'invest for the future,'" he added, noting his budget includes major cash for universities, such as $1 billion towards clean-energy research.

Both the NDP and the Bloc Quebecois have stated that they will be voting against the budget. In order for it to pass, the support of the Liberals is needed.

Liberal Leader Michael Ignatieff says he will make an announcement about whether his party will support the budget at 11 a.m. Wednesday. He will meet with his caucus Tuesday evening.

Pundits have noted that much of the budget does seem to meet the requirements Ignatieff put forth for his support and the Liberal leader seemed cautiously pleased with the document when speaking to reporters.

"There are some developments in this budget that would have been unthinkable before Christmas," Ignatieff said. "That is to say the government has responded to the combined pressure of the opposition parties and those results are positive."

He did add he had some "concerns" about the permanent tax cuts and will have to study them further.

Massive deficits forecasted

The deficits proposed will virtually wipe out a decade of debt repayments - nearly 85 per cent paid back to 1998.

Flaherty announced that the government has already slipped into deficit, and will post a shortfall of about $1.1 billion in the current fiscal year that ends March 31.

It is the first deficit since the 1996-1997 fiscal year.

The surprise move of the day was the roughly $2 billion per year in income tax cuts. Those cuts will extend to $20 billion over the next six years.

The tax changes will include a slight increase in the basic personal exemption and raising the upper limit on the two lowest personal income-tax brackets.

A single person making $40,000 will save $115 a year due to the changes, according to the Department of Finance's online budget calculator. A one-earner, family of four making $60,000 would save $275.

A single parent of one child making $30,000 would save $297, while a senior couple on one $40,000 per year pension would save $366.

Business tax cuts were also included in the budget, $2 billion over six years.

Government spending will jump dramatically in the budget -- up nine per cent in the 2009-2010 and three per cent in the year following.

EI benefits will also be extended five weeks for the next two years.

Gov't forecast optimistic: experts

Patricia Croft, chief economist at RBC Global Asset Management, told CTV News that the budget seems to "have something in there for pretty much everyone."

However, she said that there is a bit of a "fingers crossed" on behalf of the government in terms of getting back in the black in five years.

"It assumes a fairly healthy rebound in the Canadian economy," Croft said of the budget's fiscal estimates.

"There will be no long-running or permanent deficit," Flaherty promised. However, he did add a slight adjustment to that statement.

"While our projections are based on the best possible information, we cannot guarantee them absolutely."

Other economists echoed Croft's concerns about the government's optimistic economic forecasts.

Dale Orr, managing director of Canadian Macro Services at Global Insight, told CTV's "On the Hill" that Canadians "are going to be in a very tough situation to the end of this year."

"I am not quite as optimistic as Mr. Flaherty," he said. However, Orr said Canada is going to be in "very good shape" compared to other countries in its readiness to deal with the global economic downturn.

But Flaherty says that his budget is cautious and says the worst could be yet to come.

"The U.S. economy has not hit bottom, some of the European banks are still not okay, there is still some banking turbulence in the United States so I am being very cautious and we have to be ready for a difficult year," he told "On the Hill."

The government is estimating the debt-to-GDP ratio will increase from 28.6 in the current fiscal year to 32.1 per cent by 2010-11 because of the deficits.

The government says the ratio will be below the current year's by 2013-14.

In an interview with CTV on Monday, Prime Minister Stephen Harper urged his Parliamentary colleagues to "stop the political games and get on with the business of passing some of these economic measures."

If his budget is defeated, Harper said "we'll have to go to an election and the people will have to decide this."

Federal budget highlights at a glance:

• $85 billion deficit over the nest five years
• Personal taxes down $20 billion over six years
• Business taxes cut by $2 billion over six years
• $12 billion for infrastructure spending towards roads, sewers and universities, $1 billion for "green" infrastructure, and $1 billion for clean-energy research.
• $1.5 billion for job training programs
• $7.8 billion for social housing and home renovation, including a one-year only Home Renovation Tax Credit of up to $1,350 per household.
• $2.7 billion in short-term loans to the auto industry.
• More than $1.4 billion for aboriginal schools, health, water, housing, community services and training.
• About $325 million for arts and culture.