This describes the US better than China. The US spends 7.8% of it's GDP on the military, while China spends only 1.9%. If any country is over-exerting itself and "starving the economy of capital", that's America.
And according to the military, most of this higher than average spending is due to the military being voluntary, and needing to compete on wages in one of the highest earning countries in the world. Whether you agree with the military's assessment or not, it's true that a significant portion of US military spending is spent on wages/compensation. A lot (not all though) of the difference between the US and russia/china is due to the later having much cheaper labor.
Also the last sentence certainly isn't true... there are many countries that spend far more a percent of GDP on their military: Russia, Saudi Arabia, and the typical example of military excess: north korea.
It certainly doesn't follow that the richer and more valuable a country becomes (and therefore more expensive personnel), the smaller their military should be.
And yet china has ~4.5x the number of people as the US.
I believe that's a minority of the VA's expenditures, but sometimes it is hard to separate. For example, my grandfather receives a hearing aid from the VA — is that because of too much time spent around jet planes, or just due to age?
But you're right that much of the VA could be replaced with a national system.
It's like saying a government pension shouldn't be counted as part of the cost of employing government workers because the workers would still have to buy food and housing whether or not their career was with the government.
My original point is that nobody (at least publicly) knows the true spending on the US military because the accounting is so baroque. The VA is just one agency whose rather significant cost is typically forgotten when quoting these numbers, but it's far from the only example.
But I don't want to compare countries. I'm not sure if there's a "right" level of military spending, but I think pro-Military-Industrial-Complex forces in the US purposefully obscure the cost in order to not erode popular support.
Not as hard as it is to get a precise number on much money China spends on its military.
China's soldier support spending is pretty significant as well, probably much more so than the US.
But consider, the cost of labor effects everything the military does... Everyone in the entire chain commands a higher wage than they would in China/Russia, whether they hold a gun or not... researchers, assembly line workers, doctors, etc... pushing up the costs of everything the military buys.