What's the point of such an abstract question? The university's goals and expected resolution for the problem would always depend critically on why the stream of grants stopped.

When a large institution is faced with uncertainty about the future, it’s both feasible and prudent to make plans that account for multiple future outcomes. In this case, it makes sense to do both of the following:

1) Fight the administration in the legal system.

2) Plan for the case where some of those legal fights are lost.

What does it mean, concretely, to plan for that case? It doesn't sound like there's any risk of a scenario where, like, Columbia can't pay maintenance staff and all the buildings flood. If the US government freezes them out of grant funding, then the research funded by those grants won't be funded any longer - there's no careful planning you can do to make that less true.

A practical turn: can, say, Harvard or Yale answer: "Screw you, government, I don't need your money, go away!"?

What is "a lot"? The question is pertinent.

Additionally, the follow-on questions are irrelevant. There are a million better questions to ask on the other side of this as well, before we ask why someone can't live without the money that they've been acquiring entirely above board and legally. "Why does the gov't think it has the authority to do this?"

Why do we need to have theoretical debates about legitimate circumstances, when there are real debates about illegitimate circumstances happening? having this irrelevant follow-on discussion is doing the gov't's work for them.

In a different setting I can see asking this question, but there is no need to ask this question while the circumstances are clearly illegitimate.