A more sophisticated version of this argument, favored by President Obama, distinguishes between wasteful government spending and "job-creating investments in education, innovation and infrastructure." The problem with trusting the government to invest our money is that it faces no penalty for making bad calls.
Consider education spending, which Obama treats as an unalloyed good. Between 1961-62 and 2006-07, according to data from the U.S. Department of Education, per-pupil spending in public schools more than tripled in real terms, while student achievement stagnated. This was a "job-creating investment" only in the sense that it created jobs for public school teachers.
Picking up the president's investment theme, The New York Times says it's "obfuscating nonsense" to declare that "we're broke," as House Speaker John Boehner, R-Ohio, likes to do. "A country with a deficit is not necessarily any more 'broke' than a family with a mortgage or a college loan," the Times explains.
Suppose the mortgage is twice the home's current value, the college loan was used for an unfinished degree in anthropology, and the family cannot make payments on either without borrowing or stealing because it has no income of its own. Now this family looks more like the federal government.
Whether we call it "broke" or not, no one should be lending it any more money until it gets its house in order.