Space is the global high ground. From orbit you can look down on anything and anywhere. If we start arming space, the only Nation that could compete is China. Oh, a few others might try - they won't want to look out of it, and will have to do something to save face, but compared to China's potential, their efforts will be minimal and weak.
This is also a repeat of a supposed strategy that hurt if not defeated the USSR. The USA spent a lot of money on defense, that Russia was forced to copy, and they really couldn't keep up. So maybe the reasoning is that if we do the same with Space and China, maybe we'll distort their economy too.
Let's look at some of the weapons some imagine could be made and placed in Space.
Rail guns: basically a rail gun is a pair of railroad like rails, along which a large mass is accelerated usually using magnets. The mass itself doesn't need to be made of anything explosive, for its value comes from the initial acceleration provided by the magnets, to which then is added the acceleration provided by gravity. In a sense we manufacture our own outer space meteors which we get to direct at specific locations. Makes for a lot of cheap go BOOM! Meanwhile, lets hope the aiming computers work right.
Particle Beams: these are like our fantasy pictures of ray guns, except a real ray gun needs a lot of energy, and we can't actually build these as hand held weapons. For energy you need a nice small nuclear reactor, and as long as the reactor stays in orbit (doesn't get shot down by a missle, particle beam or rail gun from some other orbiting weapons platform), everything is okay. The beam (ray) is made something like your experimental accelerator used in physics, with the difference that it sends a lot of charge particles (instead of just a few) at a very high rate of speed at something on the surface of the Earth, instead of around in circles. The effect is sort of like heating the target of the beam up to very high temperatures very quickly. Again, lots of go BOOM!
Of course, using orbiting weapons platforms to rain nuclear tipped missiles down is old news (I think we once signed a treaty not to do this). Missile technology is old hat (our arms merchants have been selling the best ideas to China for years), so its just a matter of how fast you can boost into orbit the necessary stuff, and whether you want guys in Space on these platforms, or whether its cheaper to just turn the whole thing over to computers, which of course never can get hacked or otherwise screwed up as we well know.
Now this is a wonderful high budget item, and will keep the industrial part of the military-industrial complex happy for years. What with oil disappearing as an energy source, and the coming of a lot of economic chaos such that we enter a new depression, a nice serious arms race will keep some of our industrial capacity going full time. Pass a new draft, and we really become the world's policemen. If fact, why not militarize the whole Country while we are at it. Makes for better discipline, something that will be very much needed when half the work force becomes unemployed.
Anyway, like I said at the beginning, it makes a lot of CRAZY sense.