Conservative leader David Cameron has said future generations will pay the price for the UK's soaring debt levels.
Every child born was going to have "£17,000 of Labour debt hanging over them", he told an audience in London.
He described the government's cut in VAT from 17.5% to 15% as a "tragedy", saying it was "wrong in the short term and wrong in the long term".
But Gordon Brown defended the UK's debt levels as being lower than other major economies such as the US and Japan.
'Not working'
Mr Cameron said the government was "wrong about the past, getting it wrong in the present and getting it wrong about the future".
Talking about the economic downturn, he added: "At its heart it is a debt crisis."
Individuals, companies and the government all owed too much, Mr Cameron said, and the UK could not afford the current fiscal stimulus as government debt was already too high.
The VAT cut would mean a £12.5bn reduction in government revenue, he added.
Mr Cameron said: "The tragedy of it is that it's both wrong in the short term and in the long term.
"It's foolish in the short term, as it's not working... It's also foolish in the long term because it's adding to our national debt and it's going to have to be paid back."
Debt argument
But the prime minister defended the VAT cut, saying it was the "quickest way" of putting money into people's pockets and had resulted in bringing prices down in the run-up to Christmas.
He said there was "no argument" about the fact UK debt levels were lower than its major competitors and challenged the Conservatives over the need to invest to support the economy.
"I don't see why children should pay the price for a global financial crisis"
"We took the decision in good times to reduce our national debt," he told BBC Radio 4's World at One programme.
"By the end of this global downturn our debt will still be lower, as a result of what is happening, than in the US, Japan and Italy."
He rejected Conservative claims that future generations would suffer because of his mistakes, saying Labour had done a lot for children including boosting child benefit, increasing nursery places and extending parental leave.
"We are investing in young children and I don't see why children should pay the price for a global financial crisis," he said.
For the Lib Dems, Treasury spokesman Vince Cable said he supported the idea of using public spending to support the economy but ministers must be "more ambitious" in how they approach the economic situation, which he described as a "national emergency".
The party has attacked the VAT cut, saying the money should have been spent instead on infrastructure such as housing and transport.
"We are all in favour of a fiscal stimulus but not the way the government are doing it," he told BBC News.
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