I am sure the F-35 is a work in progress, and with the new technology on it, it will take some time. Much like the Boeing 787 Dreamliner- the bugs are still being worked out.
The F-16 was built for dogfighting. It is considerably smaller and more nimble than the F-35, faster, and more versatile. I am not terribly surprised that it makes the F-35 look stupid in air-to-air combat.
As far as targets far away, and air-to-ground capabilities, the F-35 wins that, hands down. The technology and stealth capabilities ensure that. Hell, the first stealth fighter, the F-117, would be completely useless in a dogfight – a sitting duck. It is cumbersome and subsonic. But in taking out tactical ground targets, and sneaking into hostile territory undetected to complete its missions, it was unmatched.
I personally think that we can find better ways to spend that money. Russia is in no position to try and match us in an arms race. China has a long ways to catch up. The biggest threats to us, namely terrorist organizations, aren’t exactly the most technologically savvy, and they are resorting to more effective, cruder measures to hurt us.