That said I am unsure if that is that much of a blow. The government is very good at some things, it looks to me (I am a casual observer) that SpaceX has eaten their lunch in terms of a space programme.
But the James Webb was exactly the sort of incredibly difficult, high risk project that NASA (and Government labs generally) excel at. No private company would ever do something like that. It is a huge achievement and is changing our view, again, of the Universe.
So I guess it will be doomed now too. Noting so dangerous as a good example.