TL;DR: this isn't stupidity unraveling. It's the Oligarchic takeover of academia and science
It's cute that the post assumes ignorance. We are way past the Hanlon's razor phase. Cutting indirects is a way to punch $10-100M holes into elite universities' budgets overnight, sow fear and render them financially vulnerable. The prestigious universities will be bailed out by private donations and boom, you have an unprecedented scale of oligarchic influence of leading academic institutions and academic research.