Who decides about the money?
I would give every scientist a yearly budget to distribute to Research Organisations / Research Projects. Let's try democracy instead of oligarchy (and maybe ending up in populism or anarchy).
Your claim that this advantage exists is based on an assumption that you've accurately evaluated the likelihood that the people who were rejected would not have been able to do the research. I don't think you have reliable data to draw such a conclusion. As such, I don't accept this claim to advantage.
However, I do agree that some plausibility metric relating the funding requested to the difficulty of the proposed research would be valuable to weed out overly ambitious projects. Moonshot programs can then rely on the lottery.
Coincidentally just came across this thread which discusses exactly how much of a fiction this is:
https://twitter.com/ThomasVanRiet2/status/162540854754145894...
The solution is to stop pretending there's a problem to solve when there isn't. That's literally what she's saying.
The obvious corollary is, "work on real problems instead of pseudo problems and stop trying to take funding away from people working on real problems".
It seems perfectly obvious that we've passed the point of diminishing returns and it's time to focus on other things until we have a compelling reason to revisit this.