The major expansion of American government power was directed at the war effort; not at long time changes in governmental policy. The Lever Food and Control Act created the U.S. Food Administration to garner resources for the war effort. Under the leadership of future President Herbert Hoover, the Food Administration urged Americans to observe meatless Tuesdays; wheatless Wednesdays, and porkless Saturdays. The Espionage Act of 1917 provided penalties of up to twenty years for interfering with the war effort, or inciting insubordination, disloyalty, or refusal to serve in the armed services. Similarly, the Sedition Act of 1918 made it illegal to interfere with the sale of war bonds, or say or write anything,
disloyal, profane, scurrilous, or abusive about the American Government, Constitution, Army, or Navy.
Among those prosecuted and convicted under the Sedition Act was Eugene V. Debs who famously stated he was against all wars except one, and that was the worldwide worker's revolution.
It is highly doubtful that the two acts cited above would stand Constitutional muster during the present; however they were challenged and upheld by the Supreme Court in the case of Schenk vs. U.S.in which Chief Justice Oliver Wendell Holmes wrote:
The most stringent protection of free speech would not protect a man in falsely shouting fire in a theater and causing a panic .
The Court held in the Schenk case that the First Amendment did not apply when there was a "clear and present danger" of evil results.
During World War I, the power of the American government expanded. This expansion did not necessarily last very long after the war, but it did help to lead to a new relationship between government and businesses.
During WWI, the government needed to ensure that businesses would produce the type and quantity of equipment that the armed forces needed. In order to do this, the government tended to work with businesses (rather than simply telling them what to do). The government created things like the War Industries Board to coordinate between business and the government. These boards did not last long after the war, but the idea that the government could work with business to achieve its goals (rather than simply letting business do what it wanted) did last. In that way, the power of the American government was expanded.