Sure, situations like that with O'Neill happen. It's just rare, and rarely gets passed into law. Remember "Pay-go" when Clinton was Pres? How about Al Gore's "lock box"? About 10 pages ago I wrote about John Kasich's add-on/carve out long-term Social Security plan. He was very astute, until he sold his soul to money and the power of the far right in the GOP. But that's how he ended up governor of Ohio.
There actually are a few good people in politics. Just that the system is so corruptable it swallows almost everyone who enters it. And the few that do stand true to the principles they believed when elected end up marginalized, often by their own party. The Ron Paul's, Mike Gravel's, Dennis Kucinich's. Or they just get fired, like O'Niell.
You really should read some of Andrew Bacevich. This is precisely what he articulates.
Here's his book on this very topic. And
here's a blog about the war machine mess and defense spending's sacred cow. If you'd rather watch than read,
here's a 27 minute interview with Bill Moyers.
You pretty much summed it up. But as I wrote about energy before, as this is very much about energy, you don't want to get caught in a false dilemma like many politicians do. This isn't a cut and dry issue of get oil from the Middle East or drill our own country to nothing (or both!). There are other forms of adaptation. Sadly, we hardly explore them or broach them at all. Even in the very aggressive last 5 years or so, there's really been only a small amount of change to electric anything. We've had the opportunity to pursue wind and solar power (and nukes even) for decades.
President Carter spoke about it in his famously drab "Malaise Speech". No one wanted to hear it then, and many don't want to hear it now. We'd rather change only when absolutely forced to, when the oil is all but gone. And according to some alarmists like former CIA agent turned investigative journalist
Michael Ruppert, that day is closer than we realize.