The WWII argument mainly depends on how much you accept Keynesian economics. Trying to define them in a sentence inevitably simplifies them to the point of distortion, but let’s just say that his view was that in a time of depression - low productivity, high unemployment - the government must pump money into the economy, even at the risk of running large deficits. (The flip side of this is that when the economy has recovered, the government must turn around, increase taxes, and build up surpluses to comfort the next slowdown. Few politicians are ever willing to do this and the consequences have been seen over and over.)
Keynes’ arguments were not well understood and not accepted at the start of the Depression, even by Roosevelt’s advisors. Some of his first acts as President were in effect attempts to try to balance the budget, exactly the wrong steps to take. Some of Hoover’s top advisors remained on to write these bills. (Documented in Jonathan Alter’s The Defining Moment: Franklin Roosevelt and the First Hundred Days.) Roosevelt was not an economic revolutionary. And he was surrounded by conservative voices at all times during the Depression. Every time the economy started to improve he backed away and supported policies that would reduce spending and deficits. And each time he did this the economy took another dive. (You can see this even in a pro-business account of the Depression like the recent The Forgotten Man: A New History of the Great Depression, by Amity Shales. You have to look at what she says rather than what she states to realize this, but she’s honest enough to include the numbers.)
Conditions in 1941, therefore, were not much different from conditions in 1933. The same remedy was therefore still applicable. Huge government spending on munitions and all the subsidiary industries that are required to support a modern war did remove unemployment. Deficits were unprecedented, exceeding even those of the Civil War (which also helped the economy), but the public was more than willing to finance them through endless series of war bonds.
Why didn’t this work in later wars? For one thing, none of the later wars started in a Depression. Vietnam arose in a period of prosperity. Deficits were not a remedy but a problem. WWII, as noted, crushed civilian production. People saved money, mostly by buying war bonds, but also by forced saving through rationing and austerity programs as well as tax increases (some because they now had larger incomes to tax). A return to at least a recession if not a Depression was expected after the war’s end, but the downturn was small and short-lived because of the enormous built-up need for civilian spending and the savings with which to do so. With Vietnam we started with enormous consumer spending in an age of leisure yet tried to pile on top of this an expensive war and expensive domestic programs with the Great Society. Nixon needed to either cut these programs, politically impossible, or raise taxes to cover two sets of spending, politically impossible. Ford and Carter inherited the inflation and stagflation that this lack of decision inevitably caused.
The current wars in Iraq and Afghanistan are economically similar to the Vietnam period. We entered them in a period of prosperity, even with the dot com bust in 2000. Tax increases were declared politically impossible, but spending rose tremendously for war materials and also rose domestically. This caused a recession rather than brought us out of one.
Deficit spending is the proper Keynesian course now, because unemployment is rising and consumer spending has decreased. Tax increases are the remedy in the future, once the economy has improved sufficiently. They probably won’t happen, even though large increases in government spending are being urged. Tax cuts are the worst possible answer, but some factions will call for them anyway. It’ll be interesting to watch which political faction will win out.
For a good neutral account of the Depression and the scattershot economic policies of the Roosevelt administration, I recommend The Great Depression: America 1929-1941, by Robert S. McElvaine, which should be in most libraries or can be bought cheap used. It was written in 1984, following both the stagflation years and the milder repression of the early Reagan years. His first chapter is an amazing read because it sounds exactly as if he were commenting on the economics of 2008-9. We keep doing the same bad, but politically motivated, economic policies.
Keynes has been out of favor, with the Chicago School in ascendance for a quarter-century. It appears that those roles have been reversed with the recent failures of the system. If Keynesian economics are going to work, politicians need to remember that Keynes has two sides, and one is unpopular but necessary. The necessary part was applied just once, mostly unnoticed because of WWII. That was the difference, IMO. I don’t want to see another WWII equivalent to make it happen again but I’m afraid that’s what it will take.