> Because debt is money we owe to ourselves, it does not directly make the economy poorer

This rational only works if you're thinking about the economy in collective terms. If the U.S. government borrows money from future taxpayers and gives it to the poor today, yes, collectively it's a wash. But there are winners and losers individually: the lender got an interest payment, the poor person got some free money, and the future tax payer paid more taxes to cover both.

Telling the future tax payer, "hey, don't worry, it was an economic wash since we just owe the debt to ourselves!" would be cold comfort as he or she is clearly poorer due to the increased tax burden.