Is it really a problem if government scientists leave for industry?
It's not clear to me whether it's bad for academic scientists to leave for industry- that includes me and a number of people I have recruited from academia to work in industry. It's worked well for me, but it was very unpleasant for my cohort to expect to become professors, when they couldn't, due to the NIH budget freeze.
But were they all intending to do that in the first place?
Do you think most people who go to graduate school are intending to become academics? Lots of people say that, but it's not what I see in PhD students - many want to go into industry from the start.
I don't know a single person in my program who actually said they wanted to work in industry (other than the company founders).
Perhaps it's different in other fields.
For the engineering PhD programs (chemical, biomedical, electrical, and mechanical) I'm familiar with at (what was once termed) Carnegie R1 universities, the split ends up being around 50/50 for academia vs industry track after graduation. For bio at the same schools, I saw the same as you, near unity for academia. Of my engineering PhD cohort, I was the only 1 of 14 who founded a startup.
Furthermore, industry is notoriously tight with the results it produces; even if, internally, it's producing good science, the fact that this science isn't being broadly shared with other people is a huge drag on the pace of progress. Academic openness is indispensible to scientific advancements.
2. Suppose you don't care about providing steady scientific employment for individual scientists but do value scientific progress (I find this position contradictory to the point of absurdity, but let's roll with it). Even in this case, cyclical funding cuts are still a source of waste:
a) society essentially wasted money subsidizing the education of people who are now not using their training (some might be, but probably many aren't).
b) funding freezes are often temporary, but by the time spending rebounds all those scientists you spent billions of dollars training have moved on to indsutry (research or no). So now you have to double down and train a new generation in order to make progress.