If you fund less science, you will favor older researchers (that cost more) because they are the ones thay can produce more and have inertia from previous research project, and they know how to game the system. Thats a big issue with the NIH (in US) that they are trying desperately to solve. Unfortunately, they also often favor and give too much weight to old researchers in their grant panels and they tend to favor (not always consciously) people that think like them.

this is why we decentralize so that that billion can instead be a thousand millions, and we try a bunch of options in parallel rather than consolidating power in a flawed few, no matter how accomplished those few are (statistically, the consolidated few will always be relatively flawed to the parallel many).

In my experience, this doesn't work.

In my country the R&D budget is quite small in the first place, and there were huge cuts during the 2008 crisis.

The result of the cuts was mainly that the mafias, old researchers with political influence, and people who are experts in gaming the system got to keep their funding. In general, newcomers, young researchers, and genuinely good researchers who aren't that good at gaming the system suffered the most.

No, the truth is that these problems are caused precisely by the insane levels of competitiveness for funding - and solutions must reduce that level of competitiveness for funding, not increase it.