Partly true.What would your company have to do to cut out 25 percent of its overhead expenditures?
I'm not totally sure on what falls under "overhead" expenses. I was always under the impression that my employers could only bill the govt. for hours that I actually worked, so that vacation and holiday pay, and any pay that employees received when govt. offices were closed due to weather conditions were "overhead", but perhaps that is incorrect.
They likely bill for your hours...or rather an hourly rate. But that hourly rate is probably not simply the amount you get paid per hour. It may also include the vacation/sick leave you accrue during that time as well as your benefits or other forms of compensation. Holidays, being paid time off, may factor into the rate. Some definitions consider these as "indirect costs." Likely, other indirect costs are built into that rate as well. If you work for a private entity, these rates would also include a profit margin. Profit and the ability to pay for rent, utilities, and support staff have to come from somewhere.
By limiting indirect costs, what Trump/Musk is really suggesting is that research organizations subsidize a portion of federal research, which may or may not be legal depending on the entity and state laws that govern them. It's certainly not going to happen in a private for profit entity unless there is some way to monetize the results. Because capitalism.