While Congress and the President have spent the last several months debating the future of NASA and the manned space program, the work of designing and implementing a new reusable exploration vehicle and launch system have continued. The problem is that this program, called the Constellation Program, was cancelled back in February when the President announced his budget plans.
Met with considerable criticism on various fronts about his abrupt change in direction for the space program, President Obama has back peddling somewhat on the future of some of NASA's programs. As a result the Constellation Program has remained in limbo. With no clear direction, and no directive to the contrary, NASA has continued development of several of the program's key elements (including rocket development, emergency abort systems, etc.)
While the political battle waged on, NASA was faced with a difficult decision. Should they continue development of a program that may not produce a final product that would be sustainable, or stop work now and wait for a new direction from the government. Of course no decision is clear cut, as stopping work on the program would cost potentially thousands of jobs, but continuing with such an expensive project (more than $10 billion has already been spent) doomed for failure is also a waste of taxpayer dollars.
It seems NASA has reached a decision. NASA chief Charles Bolden, broke the silence and stated "The truth is, we were not on a sustainable path to get back to the moon's surface", effectively ending the constellation program. Now it is up to the politicians to decide what the next step will be. It is still possible that elements of the Constellation Program could reemerge in a new program, but it is not clear what the new direction will be.
The immediate loss of jobs is unfortunate, but likely many of these individuals will find their way back to NASA once a new vision is cast. In the end, the saga that is the future of manned space flight continues.