war is peace etc etc
"Department of War" was renamed as "Department of Defense" because Edward Bernays (the greatest propagandist who ever lived) said so.
Maybe not directly. In 1947, it became the Department of the Army, and in 1949 the Department of Defense. Bernays was working on Engineering of Consent at the time, and applied psychoanalysis was very subtle compared to simple Orwellian name changes. For example, Bernays wanted to get women to smoke cigarettes.