I'd heard budget rumors about this a few days ago, but now Space.com has a story on it. NASA is terminating the office that monitors space debris.

No, not asteroids--it's things like tools, and payload shrouds, and loose screws, and flaked-off paint, and the results of the occasional satellite explosion. This is a very real problem--as the article points out, we often have to change out windows or thermal-protection tiles in the Shuttle Orbiters because of strikes from these things--at differential velocities of thousands of miles an hour, a paint chip is like a bullet.

They may restore funding, and I wouldn't be shocked if this turns out to be a "Washington Monument" threat (you, know, like when the government is threatened with a budget cut, they pull out some popular thing that they'll threaten to cut, to fend off any cuts at all). It might be just part of the overall agency posturing to defend as much of their budget as possible, by threatening cuts in vital programs (while ignoring internal pork and hobby shops).

We'll just have to see how it all plays out.