I like this post by DeLong. I think there is something to his point, though I think there's a much simpler reason why people against government spending may be incorrect, and it lies not in their assumptions about the velocity of money per se, but in their assumptions regarding the relationship between income and spending and the tendency to hoard in times of crisis.
The whole point of the Keynesian revolution was to point out that in a dynamic (time and reality based) model with inventories etc., income and output in a given period do not always have to equal spending. And that, even when they do become equalized, spending (or total demand)can have a positive effect on output precisely because complete crowding out at best takes a long time to occur and, more realistically, never happens.
This is particularly true now since a significant portion of money in the private sector is NOT being spent or loaned - it is being HELD. I don't know how many times I need to say this. Money being HELD is NOT being used for consumption or investment, by ANYONE - it represents idle capacity. So, it only makes sense that we allow our federal government who is WILLING to spend our money to borrow our money that we are not using, and spend it on projects that will benefit us both in the near term and in the future.