Stephen Harper took his political opponents to task Wednesday, calling the level of spending proposed by the Liberals and New Democrats "mind-boggling" at a time when Canadians fear economic uncertainty could spread from south of the border.

The Conservative leader criticized the various daily pledges made by Liberal Leader Stéphane Dion and NDP Leader Jack Layton, saying their spending promises would drive the country into a deficit.

"If you look at the tens of billions of dollars of announcements they are making, the only way these can be financed are not simply through big increases in taxes that they're already promising — carbon taxes, GST — but it would mean deficits and large deficits, big deficits."

He cited Dion's Tuesday announcement of a proposed catastrophic drug plan and said estimates done by provincial premiers put the projected cost of such a plan at $6 billion to $10 billion a year, a far cry from the $800 million Dion had said would be needed.

"Our government will not preside over disastrous financial policies; that is not why we are here," Harper told reporters.

"I would rather lose an election, and I would rather lose a vote in Parliament than do something that I know would put the Canadian economy into deep jeopardy."

Dion denied Liberal policies would put the government finances into the red and shot the accusation back at Harper, saying his minority Conservative government has put the country close to a deficit.

Layton, too, insisted his party would ensure a balanced budget.

"To pay for what we're proposing we do for families, we will roll back the reckless, overgenerous corporate tax cuts that went to the banks and the other big, profitable companies," Layton told CBC's Peter Mansbridge in a one-on-one interview Wednesday evening.

He was referring to his large spending pledge to create 150,000 daycare spaces at a cost of $1.45 billion in the first year of the plan. A similar plan was put forth by Dion, who promised a $1.25-billion plan to create 165,000 child-care spaces.

Liberals accuse Tories of squandering surplus

The Liberal campaign said the Tories squandered the $13-billion surplus they inherited from the Liberals and ran a deficit in the first two quarters of this year.

When Dion was asked whether he would ever run a deficit, the Liberal leader refused to rule it out. He later explained it would depend on whether he inherited a hidden fiscal mess.

Federal Finance Minister Jim Flaherty, who was helping Conservative candidates campaign in Winnipeg, dismissed the Liberal comments about frittering away the surplus.

"That's money they've taken from Canadian people in taxes that Canadian people don't need. It's not a surplus — it's over-taxation," he said.

Flaherty, who is seeking re-election in Ontario's Whitby-Oshawa riding, said the Conservative government anticipated the economic crisis in the U.S. a year ago. "This is nothing new, what we're seeing right now," he said, adding the real danger lies in Liberal policies.

Harper, in his blistering criticism of Liberal spending plans, also singled out the Liberal party's star candidate Bob Rae for his legacy as an Ontario NDP premier.

"In this province in the 1990s, Bob Rae and the NDP took a slowdown and turned it into the biggest recession since the 1930s," Harper said in Welland, Ont.

Rae and other members of the Liberal team were catapulted to centre stage in recent days, appearing alongside the party leader at campaign announcements.

Harper also took aim at Dion's political camaraderie with Green Leader Elizabeth May, suggesting the Liberals would side with the Greens on calling for a GST increase.

"People should be under no illusion — raising consumer taxes, carbon taxes, the GST is the policy of these two parties," Harper said.

Economic issues have dominated the federal election campaign over the past few days, as the collapse of three financial giants on Wall Street sent tremors through world markets, including Canada's.

Toronto's TSX at lowest level in 2 years

On Wednesday, Toronto's TSX closed at its lowest level in two years, down 349 points to 11,881.

Pollster Nick Nanos said the Conservatives have yet to pay a price for what Dion calls the worst economy since 1991 because it's not yet as bad as the Liberals suggest.

Some economists say the weakening economy has not hit Canadians where it hurts — in the pocketbooks — but that day is coming, though perhaps not before Canadians cast their vote on Oct. 14.

"I think the worst is ahead for the world economy and it will carry long and painful lag effects — right now what's happening is just outright scary," said Derek Holt, vice-president of economics with Scotia Capital.

"It's a completely frozen inter-bank funding market where liquidity has evaporated and … I don't think it's at all that realistic to expect those effects won't hit home in Canada."

With files from the Canadian Press