I have no doubt there is lots of waste in US defense spending just as in any large and complex bureaucratic organization whether private or government. Secretary Gates has announced a major effort at cost reduction as he leaves office including a statement that, "...the era of unlimited defense spending is over." I thought that ended in 1945 after defense costs had peaked at 90% of federal government spending and 43% of GDP in 1944.
The charts below show a 60 year history of US national defense spending, both as a percent of GDP and as a percent of total federal spending, against which we can measure the effectiveness of Secretary Gates' efforts. It will be interesting to see how much lower these curves can be driven while maintaining a satisfactory level of national security. Data are from the BEA NIPA Tables. Click on the charts for a better view.