Those economists who argue that a significant amount of crowding out exists believe that the impact of expansionary fiscal policy will be by the crowding out. Their reasoning is that if the government increases purchases, and finances that spending by borrowing money, spending in the private sector will , leading ultimately to in aggregate demand.

Those economists who argue that a significant amount of crowding out exists believe that the impact of expansionary fiscal policy will be reduced by the crowding out. Their reasoning is that if the government increases purchases, and finances that spending by borrowing money, spending in the private sector will decrease, leading ultimately to decrease in aggregate demand.

Explanation:

When a large government, like the U.S., increases its borrowing, it can set in motion a chain reaction of events triggering the curtailment of private sector spending.  When this happens, economists describe it as a crowding-out effect. With such large borrowing by the government, the capital market is suffocated, leading to increased interest rates and less private investments.

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