A --- Increased government spending competes for funds in capital markets --- trades-off with private investment and collapses biz con

(Veronique de Rugy, PhD in economics from the Panthéon-Sorbonne University, George Gibbs Chair in Political Economy and Senior Research Fellow at the Mercatus Center at George Mason University and a nationally syndicated columnist, “Debt and Growth: A Decade of Studies,” pg online @ https://www.mercatus.org/research/policy-briefs/debt-and-growth-decade-studies //um-ef)

As America’s federal debt burden continues to grow, the government must increase borrowing in order to fund its expansive spending programs. This increased government borrowing competes for funds in the nation’s capital markets, which in turn raises interest rates and crowds out private investment. With entrepreneurs in the private sector facing higher costs of capital, innovation and productivity are stifled, which reduces the growth potential of the economy. If the government’s debt trajectory spirals upward persistently, investors may start to question the government’s ability to repay debt and may therefore demand even higher interest rates. Over time, this pattern of crowding out private investment coupled with higher rates of interest will drive down business confidence and investment, which drags productivity and growth down even further.