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Yes. Public funds for only public code. Any and arguments involving security are invalid.
Ken Thompson’s nightmare scenario was solved by a couple people who were enjoying their hobby in their free time and not by any of the military programs that have to date spent over $22 Billion and have achieved far less.
Public funds spent on anything that generates something that could be considered “intellectual property” should be public domain. Beyond software my first thought is pharmaceutical and general medical research.
Could you elaborate further, please? I didn't found anything about this story
https://www.cs.cmu.edu/~rdriley/487/papers/Thompson_1984_ReflectionsonTrustingTrust.pdf
https://guix.gnu.org/en/blog/2023/the-full-source-bootstrap-building-from-source-all-the-way-down/
https://www.youtube.com/watch?v=ycLdhqn5VI4