I suspect that opposition to this is the increase of cost and employment related regulatory burden for universities. Much of the discussion I'm seeing is whether or not certain students qualify for employment status (and presumably the benefits that come with that status). However, will not treating grad students as employees reduce the opportunities available for grad students? Usually when labor costs increased like this marginal positions are eliminated. Seems like if research positions are more expensive, research opportunities correspondingly have to be reduce.
Sure, the next shoe to drop is spend more tax money on research (given the dependency of many universities on the public treasury), and the one after that is tax more/borrow more... but even if that happens over time, the cost increase seems much more immediate. (Yes, you could raise fees and tuition, but in today's environment that would also lead to demands for greater tax expenditure.)
Anyway, curious if anyone is thinking about the other side of the equation.