I guess you never heard of a little project called the International Space Station?
The SSC was supposed to be a $4 billion project. That's what Congress was told in 1987. By 1993, it was projected as a $12 billion project. Guess where that $8 billion would have come from if the SSC project had continued? From other science projects--and most likely the ISS would have been the first on the chopping block.
America continued exploring the universe just fine--but with a broad approach instead of putting everything toward exploring one narrow area.
We're seeing a repeat of this with the new space telescope, although the outcome may be different this time. The projected costs have grown massively, and the projected launch date has been pushed WAY out. It's been defunded this year, with Congress specifically calling it out by name as to receive no funding. The Congressman who put that language in has said that this is meant to be a warning to the project's managers that they need to get their act together, and then funding can come back.