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Does any one seriously believe that US defence/aerospace companies can actually perform feats of technology any more?

Personally, I blame this on the inability of the US to provide for career paths for technical employees, and discouraging any kind of experimentation (chemistry kits, model rockets, electronic tinkering, etc etc) on the part of kids or adults.

I work in defense, and I think I agree with you. The "crisis of conscience" I have is that, on one hand, there are all sorts of colossal fuck-ups and budget overruns that everybody points to when they talk about bloat in the federal budget. On the other hand, though, you have things like the underpinnings of the Internet or work into prosthetics and robotics that have come out of military research but have been highly beneficial outside of the military realm. I chose to put more weight on the "other hand" when I chose to work in defense, but I definitely wish that the country put more emphasis on hard technical problems than it does.