The question should be, why don't the non-military projects also not support "silly research"?

The answer seems to be a combination of factors. Since WWII the federal government switched to funding "silly research", instead of industry labs common in the pre-war era. Without a doubt this was enabled by government operations to run the war.

There's also the idea that government should be run like a business, and not waste money on 'silly' things.

Yes, it's crazy that the government likes its "five year plan" style of research, where you almost have to know the answer before you get research funding.