"The military is capable of gathering all of the defensive intelligence that we need to protect ourselves."In theory, yes. In practice, no.
Military intelligence focuses on identifying and tracking threats to military forces. During the Cold War, for instance, this meant having a decent understanding of Soviet doctrine, equipment, and tactics. Civilian intelligence agencies focused on government operations, infrastructure, and the like. Overlap existed (and still exists), but their focus was different.
But let's say, for the sake of argument, that you wanted to close civilian-run intelligence agencies and turn it all over to the military.
How do you get enough green-suiters to fill all those chairs previously filled by civilians and, more importantly, keep those chairs filled by qualified individuals?
Enlistments end, and soldiers/airmen/sailors are generally given other duty assignments on a routine basis. That's institutional knowledge that walks right out the door, that doesn't necessarily happen if you've got civilian employees.
What you may be saving budget-wise (military personnel being cheaper than civilian), you're spending on training and retention. Why would an E-6 with plenty of analysis and personnel management experience stick around when he or she could make a lot more in the private sector?
And when all is said and done, does this really prevent the kind of abuses we're already seeing with civilian-run agencies?