The spending on the "defense" budget and the spending on the wars in Iraq and Afghanistan are different budgets (according to what I've read). Obama wants the defense budget to remain large (I disagree with him on this), but he wants to end the war in Iraq, which as has been said above is costing US taxpayers 12 billion dollars a week.

Even if we keep the large "defense" budget, ending our occupation of Iraq would free up $12 billion a week, which as has already been pointed out, would pay for a hell of a lot of health care.