Europe has no military power but European powers together have a massive amount of military power that is second only to US. This is a legacy of Cold War spending.

Most of this strength is still also directed towards war against USSR because with slashed budgets there has not been enough money to buy expeditionary forces (nor strategic transportation ability they would need). Thus most European forces are essentially similar meachanized forces as they were in early 1990's but with much slower equipment change cycle.

There has been discussion and actions towards European defence concepts such as common troop pools and HQs. This scared the shit out of Americans who vehemontly resist any idea of European military force capable of doing things independently. So yes, US can whine about lack of military power in Europe but it is also against independent European military power. It wants European militaries to function through NATO (where it has loudest voice) rather than any European organ (where it has no power). This is the actual cause of the US complaints.

Best source of "official" European (EU) perspective towards military issues is here:
http://www.iss-eu.org/

This text offers best description of actual developments in the security and military field in last few years:
http://www.iss-eu.org/books/5esdpen.pdf

It is good to remeber that even if you do not see news articles about Solana beating his fist on desk and issuing ultimatums nor European air forces carrying air strikes against regime targets, it does not mean EU is somehow negleting its eventual march towards more common defence policies.

What EU would pretty much like to do (and what it will im my view eventually do) has been described quite openly here. This is not official policy but reflects very accurately things Finnish General Hägglund (who was top EU military commander) have mentioned in Finnish military trade press on where EU wants to go in military terms:
http://www.iss-eu.org/chaillot/wp2004.pdf

However, it is good to remember that nothing happens quickly in military in peace time as there is no pressing need to create force structures for campaign. Thus you can again sit back and see small things happening all the time while these issues are generally being ignored in rapidly moving news cycle in US.