Jon Chait (a progressive) is against it, Ezra asks for my view. I favor indirect subsidies for the arts, and indeed to non-profits in general, through our tax system, as we already do. This tax policy is also a major subsidy to religion and, for me, a somewhat difficult decision to accept and also encourage…how shall I put it?…certain features of the American cultural landscape. Nonetheless I believe in "diversification across countries" and I don't want the United States to become too much like Europe.
In America at least, direct arts subsidies have both very low costs and very low benefits.
The issue currently at hand is whether various state-level arts agencies should be abolished or cut back, as is now the talk, including in Texas, Kansas, Arizona, and Washington state. I say these states are doing the right thing. If you're a libertarian, the choice is obvious. If you're a progressive, it is better to spend the money on Medicaid expansion or other more worthy goals. There really is an opportunity cost of this money, and reframing the choice as "so many cents per head" merely disguises that we could use those funds to save some lives. Most of the benefit of arts subsidies goes to the relatively wealthy and well-educated.
I don't see any "intermediate" argument that beats back both the libertarian perspective, on one side, and the redistributive perspective, on the other. The two extreme positions are more defensible than the middle, in this case, and each leads to the same conclusion.
Don't, however, think that cutting state arts funding will much matter for state-level fiscal problems. It won't. The budget problems are mostly about a mix of falling revenue and rising Medicaid expenditures. I am against using such cuts to promote the idea that we are solving our budgetary problems; read David Brooks on this topic.
The real news is that some states are willing to cut arts funding even when they will cease receiving their transfers from the NEA.
If you're an arts snob and wish to mix aesthetics and politics for philosophic reasons, it is better to have arts money spent at the federal rather than the state level. The state agencies are more aesthetically conservative and more oriented toward "economic development" (a myth, for the most part) and local special interest groups. The state-level spending is less meritocratic and the NEA comes closer to serving an "R&D" function for the arts. It didn't help the arts in this country when the NEA had, for political reasons, to start sending forty percent of its budget to the state arts agencies.
The case for state-level support for the arts is strongest, by far, for the state of New York for reasons related to tourism and New York City. But Manhattan, Kansas? Let them watch YouTube.
Addendum: Here is my book on government support for the arts, and the proper roles of the aesthetic and political in liberal thought.