Also, it is entirely possible to have a large military (perhaps not as large as it is now, but still larger than others) without a commensurably large economy. You just have other countries pay for it. I don't see Egypt, Israel, Saudi Arabia, etc. developing their own weapons. We get other countries to pay for them.
For instance, look at this (won't let me directly link). http://www.f-16.net/fleet-reports_article1.html
Obviously, we have an assload of F-16s (~2,250). But, add up all the other countries, and they've bought roughly 2,665. So, assuming they paid full price (I know they didn't, but that's a separate issue - foreign aid), then they paid for roughly half the development costs of the F-16. If this carries over to future projects, and we treat it like other commodities (where the people who make the thing get it for a low price, but charge higher prices to consumers), then we can finance our military with other peoples' money.
To a certain and limited degree, of course.