deficit financing

A government policy of financing large public expenditures by borrowing money rather than by raising taxes; also called deficit spending.

deficit financing

The sale of debt securities in order to finance expenditures that are in excess of income. Generally, deficit financing is applied to government finance because income, represented by tax revenues and fees, is often unavailable to pay expenses. As with monetizing the debt, deficit financing puts upward pressure on interest rates because government debt securities compete with private securities for limited capital.