I hear that...

More State Universities are going to furloughs...
And the funding agencies may agree to let faculty take salary from grants for furloughs.

This is not a good thing, furloughs are rational if sharp cuts are a short term necessity, because they avoid long term job losses and they can be implemented rapidly.
Furloughs are also not paycuts - they preserve the benefits and retirement at the base level, and are done with the intent of salaries going back to previous level without having to go through an increase.
This is a rather important distinction, in the short term at least, if situations returns to normal, that is.

But, if the situation persists furloughs are bad, because they destroy discretionary income across the whole group of employees and over the long term are deflationary.
Further, they breach contract, because furloughs in fact do not come with a lowered workload in proportion - the expectation is that faculty, in particular, will do all their teaching and service load - and they better do research if they know what is good for them...

At some universities the faculty have negotiated terms for furloughs, at others, not so much, and the furloughs are really a complete joke.

The Econbrowser dare-double-dares his UC colleagues to take their chances on the free market, but to not let the poor students suffer.
I am skeptical.
There seems to be a curiously asymmetric obeisance of contracts in the current US, with certain institutions free to unilaterally impose new terms, while others are held strictly to their side of the agreement.
This cannot last persist, even if the economy continues to suck.

In the meantime, I hear that the federal agencies have agreed that faculty may take research funds and pay extended salaries to cover furloughs, since these are times off from university duties but research is permitted.
Paying for extra faculty time is pretty standard for DoE and NASA, don't know what NIH guidelines are, but for the NSF this has long been verboten - NSF pays for no more than two months summer salaries, ever.
Well, apparently no more, precedent may have been set already and NSF grants may be reprogrammed for faculty salaries to cover scientists on furlough.
R-1 universities are also trying to play funding games to keep their research faculty happy through the furloughs - how that plays out in practise and how selectively will be interesting to see.

Ah, but there is a catch - there is no extra money for this. The funding has to come out of other lines, and ultimately that means less graduate student and postdoc money.
Which is not good.

In fact it is double-plus ungood, since word is that a large fraction of universities are likely to sharply (like factor of 2 sharp) cut the intake of graduate students.
Even in the sciences. This is not official, some places have decided, others are contemplating - it'd be a great time to raid the pool of students for anyone who can keep up their intake - but with more people staying off the job market, and a demographic bulge in potential intake this is a bad time to lose student slots.
Also, at some point the old demographic bulge must retire, though with retirement funds hit a lot of people are thinking maybe not quite as soon as historical statistics would indicate.

More on this later.
For now I am curious as to whether the agencies will actually let the furlough buyouts proceed.
When I proposed this I was joking, as indicated by the title.
Interesting times.