There is an enormous difference between investment from created surplus wealth, and investment that has simply been diverted (taxed) from someone else's surplus wealth.

This is an extremely important distinction. The same thing applies to private, wealth-creating people borrowing money, and governments doing so.

A farmer gets loans to plant his crops. At the end of the year, if it's a good year, the crops are new real wealth, created by his skill, time and property. He pays the bank back with interest from profits, and the net result is an increase in actual wealth on both sides.

The government borrows money from its citizens and pays back the interest and principal from money taxed from those citizens. Heck, when China buys our paper, who do you think pays THEM the interest?

Imagine going to a bank and getting a loan that you tell them you will pay them back from money you borrow from the bank. Think you would get it? Governments do exactly this. The productivity that pays it back isn't from the borrower, it's from the lenders.

You cannot create net wealth by having the government hire everyone to do things. The initial results will look good, but it's like drinking seawater.