> Why don't the US retreat into their internationally recognized borders?

Mostly they were allowed there by the government of the place.

They are criticised for the exceptions.

> GDP largely based on death and destruction

For all the flaws of the USA, this is not really what their GDP is "based on", though perhaps one could say that functionally they hide conscription by giving many unemployed men a Hobson's choice of signing up vs. going hungry.