Ed Balls today warned that the Government's deficit reduction plan is "economically unsafe" as he stepped up his campaign for the Labour leadership.
He said the challenge for the winner of the leadership contest would be to "expose the coalition's plans as heartless and wrong-headed".
In a keynote speech in the City of London he said Chancellor George Osborne's plan has as much economic credibility as a "pyramid scheme".
Shadow education secretary Mr Balls warned against rushing to cut spending, claiming even former chancellor Alistair Darling's plan to halve the deficit in four years - backed by Labour leadership rival David Miliband - was "a mistake".
In his speech at Bloomberg's headquarters Mr Balls said the "Tory cuts are not just unfair, but both unnecessary and economically unsafe".
He said Mr Osborne's plans would "suck money" out of the economy by cutting public spending and benefit payments while increasing taxes.
"George Osborne was fond of saying - wrongly - that the Labour government had failed to fix the roof while the sun was shining.
"What he is now doing is the equivalent of ripping out the foundations of the house just as the hurricane is about to hit."
He dismissed Mr Osborne's argument that slashing spending and benefits while raising VAT would not hit growth and employment prospects because the private sector would "somehow rush to fill the void".
He said: "This is 'growth denial' on a grand scale. It has about as much economic credibility as a pyramid scheme.
"For George Osborne, read Bernie Madoff: he'll take your money and take your job, but don't worry - if you wait long enough, he promises you'll get it all back from someone else."
Mr Balls acknowledged that the deficit has to be tackled "but only once growth is fully secured and over a markedly longer period" than is planned.
"For the medium term, a credible and pre-announced plan for reducing the deficit needs a careful balance between employment, spending and taxation," he said.
Mr Balls said he would start the top rate of income tax at £100,000 and reinstate Labour's rise in national insurance.
He added that he agrees with David Miliband's call for a wealth tax on the largest estates.
Mr Balls said Labour's next leader would need to give a "stronger, clearer vision of the fairer Britain we will fight for".
"We must persuade people in their heads as well as their hearts to come back to Labour again.
"And by comparison we must expose the coalition's plans as heartless and wrong-headed."
Mr Balls later disclosed that he believed that even the former Labour government's plans to halve the deficit had been going too fast.
"Before the election I said to Gordon Brown and to Alistair Darling that I thought that halving the deficit in four years was too fast," he told BBC Radio 4's The World At One.
"I thought it would be very difficult for them to command wider market and public support because it could put growth and jobs at risks and it could put public services at risk."
He strongly hinted that Mr Brown agreed with him but was overruled by Mr Darling, the then chancellor.
"In the end, these are decisions that are made by the chancellor of the exchequer," he said.
"In government you win some arguments and you lose some arguments. These are discussions that Gordon and Alistair had and then they decided the way forward."