Why does a larger government budget deficit increase the magnitude of the crowding-out effect?

The crowding-out effect states that the government borrows to pay for the deficit, it drives up the interest rates in the marketplace for all other borrowers. This higher interest rate then discourages consumers and business from borrowing. In other words, the government borrowing for deficit financing crowds out private spending and investment. Therefore, the greater the increase in the deficit, the larger these effects will be.