I completely agree with that sentiment. I think it would be great to usher in a new "New Deal" of sorts, that focuses on creating jobs with the sole purpose of building new infrastructure and maintaining and repairing the crumbling system that we're currently stuck with. There will come a time where we will need to replace or repair much of it, and probably at a great cost.
I completely agree with you, but unfortunately they're in so deep now they can't just suddenly reallocate massive amounts of military spending with huge repercussions. I believe the transition would have to slow and gradual to accommodate the job loss and retraining of those employed by the military. Another fun thing to think about it what effects it would have on global politics if the US withdrew military presence around the world.
Incrementalism. Most things in government work through incrementalism. As you said, you can't change this overnight. It would probably take a ten year process to reallocate billions of dollars without it having a truly detrimental effect. As for withdrawing military presence, I think other countries such as China or Germany would consider picking up those pieces. Either that or we would be in an era with less international interference.