When the government spends an additional dollar, the private sector will spend some amount less. The reason for this is because when the government borrows money the private sector will need to lend to it. US government debt is generally considered to be near risk free, and can be used as collateral for loans at almost 100% of it's value. Since the private sector can not borrow 100% of the value of government debt, the amount below 100% that cannot be borrowed against is the amount of lower economic output due to additional government spending.