Yes, while our kids will inherit the debt owed by the government, they will also inherit the bonds sold by the government to citizens to cover that debt.
But there is still a potential crowding out problem. Every $1 spent to buy a government bond is a $1 that is unavailable for investing in private enterprise. The real question is not if the debt is unsustainable, it is whether the ROI of the marginal $1 spent by the government paid for by debt is greater than the ROI of whatever private enterprise would have built with that $1. Governments do a lot of useful investing (roads, basic research, etc) that probably has reasonable ROI. However much of the deficit results from the vast transfer payments made by the government (Social Security, Medicare, food stamps and farm support). On average over a business cycle, deficits should cover the real investments while transfer payments over a business cycle should be covered by tax revenue.