Robert Barro explains that government borrowing to finance transfer payments is not stimulative.
Do keep in mind that this does not address the value of government borrowing for shovel-ready projects. If (IF!) the Feds could hire laid-off engineers and invent a more efficient battery, or internal combustion engine, I am sure it would be a net societal win. However, it is a win because of the (previously and mysteriously overlooked) value of the project, not the government spending per se.
As to why these fabulous spending opportunities have been overlooked, well, Obama himself ruminated about the seeming lack of shovel -ready projects.