US military spending exceeds the next 10 nations COMBINED. Of those 10, half are allies (UK, France, Germany, SK, Japan). Surely, we could cut 20%, still outspend our rivals (China, Russia, India) by >30%, and be ok?
The goal since WW2 has been dominance, not just in Americas, but also in East Asia, Middle East, etc. China, on the other hand, has had the luxury to concentrate its efforts more strategically. To reduce military expenditure, the US would have to dial back the breadth and depth of reach. Giving up on Taiwan, and then letting Korea and Japan fend for themselves against China would probably also be needed if it were to cut back on its ambitions. Nuclear proliferation would be an immediate outcome.
The US could cut back and still compete in the West Pacific/South China see but it would have to focus there very heavily to the detriment of the existing implied obligations to NATO. Part of the US's politically dominant position post WW2 is that we've signed ourselves up to be anywhere in the world fighting a large scale conflict inside of a month with huge stockpiles of everything you need to fight all over the world, including one floating one that can backup the standard land based prepositioned stocks. [0] Granted a lot of that was also enabled by being the only major economy not significantly bombed through the war but that advantage was heavily invested in since then.
[0] Wendover Productions has a great video about the insane amount of logistics dedicated to the goal of never having to wait for materiel practically anywhere in the world. https://www.youtube.com/watch?v=iIpPuJ_r8Xg
Coincidentally, this whole Russia Ukraine war has pushed most NATO nations to build up their military and re-arm. If Europe can actually defend itself, the US's obligation there reduces significantly.
Yeah and it's much cheaper to operate locally and defensively than it is to have a very expeditionary and overseas force the US has so they /could/ close the capability gap for less money. There is a bit of difficulty having so many different militaries needing to work together but it's something that works with practice.
The issue is not that the US needs to be stronger than China.
The issue is that the US population has a very low tolerance for combat losses (especially losses defending a foreign country), and the Chinese population (read Communist Party) has a much higher one (especially losses towards what they perceive as country reunification). If in a fight the US inflicts one million Chinese casualties, while incurring one hundred thousand, then the US might call it quits.
The US need not only be able to defeat China, but do it with minimal losses. That's why you need to maintain the huge capabilities gap that currently exists.