Here's an easy approach to a counterargument.
Private foundation grants account for less than 10% of all research funding in the sciences [1]. The fact that researchers apply for and receive private grants has _nothing_ to do with whether their funding restrictions would be sustainable when scaled up.
While I will happily concede that there is always room for improvement with how we fund research, your suggestions are impractical and would heavily handicap existing efforts.
In your mind it seems to be "those people come pleading for money so they can do research, giving it is essentially charity"- but it couldn't be further from the truth.
Most top-tier researchers can do their science anywhere. If you don't make stuff easy and comfortable enough to hold them, they'll just leave the country. A significant chunk of science spending is an attempt to bribe researchers to stay. Drop that and other countries are going to get those invaluable people.
I can tell you that several major EU universities have started massive outreach programs and are starting to snatch all the top researchers from the US. The damage this will cause to the US' scientific leadership is not even quantifiable, it's completely insane.
Shooting your own foot because you "don't trust bureaucrats". Oh well.
Anyway, at my university the first few top researchers already arrived, this is going to be exciting in european research. If you guys don't want this massive advantage, we'll gladly take it.
One of my friends, who is a tenured professor in a top 10 US university, already switched our Signal messages to expire after 24h the other day. I asked him why, and he said "you never know what the current administration might use against you".
So yes, I'm all for having our people back if the US voted that they don't want them.
1) We refuse them when we can. Like if you have a lower indirect rate, my institution's policy is that has to be located somewhere that's documented, you can't just do it. I did have one where the sponsored programs folks just said no.
2) As mentioned, they're sort of a drop in the bucket, and also important to junior faculty, so they're a little bit accepted as loss leaders.
3) At several institutions, it was made clear to me that if you relied on these, and not "full fat" grants, by the time you came up for tenure, things would be bad.
The great irony is every research administrator I know (and I know a lot) sort of hates these. If they had wanted to, "You cannot charge a private organization a indirect rate lower than your negotiated federal rate of the same type" (there are different rates depending on the nature of the project) would probably have been met with "Yeah, that tracks."
Instead, they're trying to use it as an excuse to absolutely gut research.