I agree with the sentiment, but my impression (based on little evidence) is that the "need" here is to create a wider market for these weapons.
It takes money to develop new weapons, and a larger customer base helps defray those costs.
It's pretty obviously just a way for the federal government to subsidize domestic police forces with money nominally intended for the defense budget.
Quite a bit of the defense budget seems to have this goal, and it's not crazy -- if you skip a generation of tanks/planes/ships because your old ones are OK, the experience to build the next generation will have to be re-grown from scratch.
Mostly I don't think it's clear that "subsidize domestic police forces" need be the main goal.
My take on the neutral explanation would be is to assume that it's like every other policy -- about a dozen people with varying motivations had to support it, and then a few more motivations got added by PR people, and by whoever doesn't want it to stop. Policies "pretty obviously" driven by exactly one factor are extremely unusual.
If you dig into the line items I'm sure there will be some compromises to get the maximum number of votes, but that's a far cry from an elaborate scheme to line the pockets of the military industrial complex.
It's not hard to imagine this bill passing on its own merits without heavy lobbying. No one in the 90s was going to want to be painted as anti-cop, pro-drug, pro-terrorist, and/or pro-government waste. Even if we now see the terrible consequences of police militarization, and many still don't, that's hindsight. At the height of the war on drugs, as children who grew up hearing about serial killers in the 70s were now worrying about their own young kids, taking the weapons that had been lying in warehouses since Nam and putting them to good use protecting the streets here at home had wide bipartisan support. It costs very little, makes people feel safe, and makes a lot of politicians look good.
Again it is good to question the official narrative, but your hypothesis needs to be falsifiable. You will always be able to go a layer deeper and say "oh well they did it this way to make it harder to see their real motive" but without evidence there is no reason to continue going down that rabbit hole.
I suggested one other motivation some people might have felt, of keeping the hardware moving. You've suggested some more, too, now, like looking tough on TV. Maybe that means we agree.