Deficit spending leads to lower potential output, not higher potential output. Deficit spending drives up interest rates, which lowers the rate of capital accumulation. Less capital means lower potential output.

Deficit spending leads to less private investment, not more.

Deficit spending leads to more government borrowing, not less government borrowing.

Deficit spending leads to higher interest rates and less spending on investment. Less investment spending means the rate of capital accumulation in an economy will slow down, which will lead to a slower rate of economic growth or even a decline in potential output.

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