Originally written in 1983 (pub. 1985), Luttwak's book addresses many of the problems with our military that still haven't been fixed.
While some of the strategic issues discussed are outdated, and you can fault Luttwak's opinions on some things -- he's a conservative, and occasionally makes nasty remarks about liberals -- the man identified multiple serious problems that contribute to the bloating of the Pentagon budget and the need for major military reform:
The military producing overpriced equivalents of non-combat equipment that could be bought from civilian manufacturers just as easily -- while I think the famous $600 hammer was still a few years off at the time of writing, Luttwak gives examples of things like diesel generators that ran $30,000 more for the "military" model.
The redundant Research & Development bureaucracy that vastly inflates the cost of...well, everything. Weapons, ships, planes, tanks, you name it.
Unnecessary numbers of costly mid-grade officers (Captains through Colonels), many of them part of the aforementioned bureaucracy.
Money wasted by producing weapons to do a specific task that could easily be accomplished with existing weaponry and a slight alteration of tactics.
I'll post specific excerpts in a couple of days, but for right now, I just want to make people aware of the existence of this (quite cheap used) book:
http://www.abebooks.com/servlet/SearchResults?an=edward+luttwak&sts=t&tn=the+pentagon+and+the+art+of+war&x=0&y=0P.S. Surest proof that Luttwak has a point: Neo-conservative hacks like Rumsfeld and Gingrich read the book, made all the appropriate concerned noises...and then ignored
every single idea in the book.