The problem with it, is that it puts the fate of research grands in the hands of people who know nothing of the value of the research at hand. It also puts it in the hands of people who don't believe in research. For example, I'm sure climate change research is going to get targeted by climate skeptics as wasteful, evolution and big bang research by creationists, etc.

That said, the two he listed do sound pretty ridiculous. And I'm sure there are more that need cutting. It's the idea of having your grant judged by people who know jack shit about the science involved -- or are even actively hostile to it.