This soft-money based system evolved at at time when over 30-40%* of NIH grant applications--and some years over 50%--were approved for funding. What happens when grant approval rates are closer to 10-15%? Here is one indicator: a Google search for "soft money" (not the political kind) and "stress" results in over 59,000 hits**. Considering also the vagaries of the grant review system, the soft-money system verges on cruelty. Highly-educated, generally very intelligent researchers are forced to compete against each other to be one of the few investigators selected for funding. Loss of research funding could very well equal loss of salary support and derailment of ones career. And people are wondering why physicians don't want to have biomedical research careers anymore?
As a physician-scientist, I am fortunate in that having to leave academia would result in an increase in my income, and it would not be hard to find a job as a clinician. If I'm stressed, I wonder how straight Ph.D. faculty members must feel? The 59,000 Google hits I mentioned above give some indication of this**. There is also much discussion of the current dire funding situation--the angst is almost palpable--and it's impact on medical school faculty careers at the blogs of other biomedical researchers, including my current favorite***.
*link will download an Excel file from the NIH website
**see first comment for caveat regarding using a Google web search for quantitation in this manner
*** "my current favorite" except for the occasional political commentary, which is often uninformed and/or venomous.