REASONS TO RALLY BEHIND THE NEA
Any examination into urban communities determines that the arts fuel jobs, fuel arts-related spending, and fuel tourism. (Example: San Francisco). Whatever the criticisms of some of Richard Florida's methodology, he and others are increasingly acknowledging the role that arts and culture play in developing a cultural economy. One of America's most successful cities is New York, and it often places the arts at the center of its urban policy. Fostering the arts is fostering the economy. The LA Times, for instance, said that for every dollar spent in the arts, it returned $18.75. There's a strong economic case to be made for us.
YOU CAN'T HAVE LOCAL ARTS WITHOUT FEDERAL ARTS
As Isaac pointed out, although the NEA doesn't give out a lot of direct spending, it does support state and local agencies in a big way.
WE'RE NOT AS SPECIAL AS YOU THINK
The arts are not some sort of failed industry because we accept subsidies. So do most of the rest of the economy.
There's a certain slice of culture that will survive in the marketplace. Some of it may not. Just as Republican Democracy involves protecting the rights of the minority from the rule of the majority, so does arts subsidy have the potential to protect smaller communities -- what has been described as "the long tail" of culture. In some areas, the low cost of business allows the long tail to flourish. But in others (e.g. performing arts) the cost remains incredibly high.
ARTS ARE A SPECIFIC FORM OF STIMULUS
As FDR realized with the WPA, money to the arts is really a way to get artists to support themselves using their skills, so they can move out of low-skill work and transition them off of other forms of subsidy. Unemployed artists will take unemployment checks and food stamps instead of NEA money.
CREATING OPPORTUNITIES FOR ENRICHMENT
Ironically, this is following in the footsteps of Andrew Carnegie: if you're going to fund institutions, fund institutions that help enrich the community. If the arts are a form of stimulus, remember that they're a form of stimulus that can help create community and enrich the mind (to take a study at random: The Effects of Art on the Brain of an Underprivileged Child). This is why we provide massive subsidies for the literary arts in the form of libraries, rather than just having bookstores and letting the market do the rest.
WE IMPROVE QUALITY OF LIFE
There's a lot of research out there about the role arts play in gentrifying communities, and many local communities choose to use the arts to make their cities better. Why is that a need for the NEA? Look above: local decisions require federal support.
INDIRECT SUBSIDIES ARE DEMOCRATIC
Allowing people to write off charitable donations to the arts allow people to allocate Federal money to art organizations in a way that is a lot less fraught than having an elite panel giving out the money directly. I think the NEA and direct subsidies can be good for getting money in the hands of arts service organizations and establish organizations that do a lot of good to the whole community; indirect subsidies are basically audiences "voting" on the arts organizations they like. They prove that the arts organization is, in fact, serving a group of people who are interested in its survival.
WE'RE NOT THAT BIG A PART OF THE BUDGET AS IT STANDS
There's no reason that the arts should suffer when we're so insignificant in the budget. We spend far more money on stupid things, like oil subsidies or farm subsidies, and we're not linked to the structural problems that contribute to the massive deficit, so cutting us is only going to provide short-term benefit.
SOMEONE IN THE GOVERNMENT NEEDS TO BE LOOKING OUT FOR CULTURE
In England, they have a Minister of Culture, Media, and Sport. For people in the cultural industry, he's the person looking out for them -- the person in government they can appeal to as a representative. Today, for better or for worse, that's Rocco Landesman. If you get rid of the National Endowment of the Arts, then the arts and culture have no one looking over cultural policy. And when it comes to important legal/political issues (e.g. copyright), it would be good to have someone from the arts representing the arts. If we lose the NEA, we're invisible.
FOCUS THE NEA'S ATTENTION
Rather than trying to use the NEA to simply preserve and promote all arts, focus the NEA's attention on ensuring that under-served communities have equal access to culture. This can mean geography (see: Scott Walters), diversity, poverty, and other groups, to ensure that our "marketplace of ideas" doesn't drive niche communities out of the arts. The NEA should be able to articulate its aim to serve the public interest. This, by the way, might mean de-emphasizing the NEA's focus on excellence, in the way that subsidies to film don't place that same emphasis.
NEA AS VEHICLE FOR MAKING CHANGE
One way that the NEA's money could be used better is if it used the money it gives out as leverage, to encourage needed reforms along the lines above.
SPONSOR ARTS INFRASTRUCTURE
Arts Service organization, and services to artists, can often have a much broader and diverse impact rather than giving direct money to artists -- although the latter is still important. Groups like Fractured Atlas, Volunteer Lawyers for the Arts, Chashama, and Volunteer Accountants for the Arts lower the cost of doing business in the arts; lowering the cost increases the vitality of the arts field without having to play favorites.