Wouldn't this be a plausible story immediately post-WWII?
1. The budgetary context in that case was the end of total warfare. Debt was high, yes, but a TON of the war expenditures from the last half decade were being unwound. So the place that the cuts would come from was very obvious and directly related to the reason for the high expenditures in the first place. You could unwind deficits while simultaneously increasing spending on everything except total warfare. Cf now: the US isn't going to cut SS or Medicare, and cuts to Defense would hit university funding streams hard.
2. The political environment is radically different. The success of the Manhattan Project, RADAR, etc. created a political environment that was amenable to shifting spending from wartime manufacturing to peacetime R&D. Cf now: there is an enormous amount of political animosity toward the academy coming from the political coalition holding most of the structural advantages. Even through the Bush presidency, Science funding was largely bipartisan. That isn't true now. At all. I think many academics under-appreciate just how toxic NSF/NIH/etc have become to roughly half of this country.
3. The GI bill infused tons of demand (and money) into the academic system, and was followed by the Baby Boom. Cf now: there's a massive demographic collapse on the horizon and people are seeking out alternatives to university education due to the cost.
https://en.m.wikipedia.org/wiki/Quaternary_sector_of_the_eco...
I don't see things going back towards the first and second sectors human labor wise, so it would have to all be taken up in the third sector (service sector)? I guess it is plausible with healthcare.
> "I feel I must remind you that it is an undeniable, and may I say a fundamental quality of man, that when faced with extinction, every alternative is preferable." - Dr. Leonard Church
It turns out that debt and money are no problem when your existence is threatened by an enemy who ideologically is committed to your total extermination. The Cold War made spending on military tech a non issue because the alternative was falling behind the Communists and possibly losing a war.