First off, I think it is important to note that the “flavor” of this question is slightly different from what you’ll see on the GMAT. Notice that the answer choices speak very abstractly about the prompt.
For instance, (C) and (D) challenge the argument at a general level, alluding to anything specific in the prompt. It turns out that the answer (E), only references two words from the entire prompt. That is not to say this question is unhelpful – you must still use critical reasoning skills.
(A) INCORRECT The word ‘condition’ suggests that the ‘public’s opinion’ is being manipulated. However, the prompt mentions that “it is doubtful whether the public can be persuaded,” which implies that the public cannot be manipulated/conditioned in its opinion of defense budget spending.
(B) INCORRECT The past and present events, which refers to the diminished threat from the Eastern bloc, does have a causal connection.
(C) INCORRECT The argument seeks to prove that is doubtful whether the public will support an adequate budget. The argument states that “it is doubtful”, showing that it does not assume as fact that the public will not support adequate spending on defense.
(D) INCORRECT The argument clearly gives a reason for the public’s unwillingness to support defense spending – diminished threat from the Eastern bloc.
(E) CORRECT The prompt argues the threat from the Eastern bloc led to the public’s support of a substantial defense budget. With the threat gone, the public is no longer willing to support an adequate defense budget.
Notice how the argument switches out ‘substantial’ and ‘adequate.’ The two words are very different, so it does not follow that if the public is unwilling to spend, say 10 billion a year (a substantial amount) on a defense budget, that it is unwilling to spend two billion (an adequate amount).
The wording “reevaluation in a new context” refers to the change in threat from the Eastern bloc.