Explain one disadvantage of increasing the budget deficit

One argument against increasing the budget deficit is that and increase in government spending crowds out the private sector. This is when government spending fails to increase overall aggregate demand because higher government spending causes an equivalent fall in private sector investment. If government spending is financed by an increase in direct taxes, such as income tax or corporation tax, this will reduce the discretionary income of consumers and firms. As a consequence, this will reduce the marginal propensity to consume and invest which can slow the rate of economic growth in the short run as these are both components of aggregate demand.