The National Endowment for the Arts' wealthiest days came courtesy of a Republican president and a Democratic Congress. For the 1992 fiscal year, Congress and President George H.W. Bush allotted $176 million to the agency—pocket change by federal budget standards, but still the largest haul the NEA has ever enjoyed. A few years later, Republican House speaker Newt Gingrich would declare war on the organization, succeeding in having its budget slashed from $162.3 million in 1995 to $99.5 million in 1996, and very nearly killing the agency altogether.

The NEA survived, but it's been a long climb back. Its budget increased steadily in the aughts, so much so that the current fiscal year's funding is its highest since the pre-Gingrich era: $167.5 million. But if President Obama has his way, next year the NEA will see its resources shrink for the first time in more than 10 years.

On Feb. 1, the president proposed a $3.8 trillion federal budget for 2011. The NEA's share would be $161.3 million—the same number the White House recommended for 2010. But Congress, after a hard-fought campaign by arts activists, eventually upped the final number for that year by a little more than $6 million. Robert Lynch, president and CEO of Americans for the Arts, was one of those who pushed hard for that congressional bump. He is already pushing again.

"I was disappointed on a couple fronts," Lynch said. "Obviously I'm pleased that the president came forward with a strong budget for the NEA. I'm disappointed that it's $6 million less than what we already have."

Lynch, not surprisingly, would have rather seen the NEA budget go in the opposite direction. His justification for an increase during a fiscal crisis (the same budget that proposes a slight cut for the arts agency also anticipates a $1.3 trillion deficit for the federal government as a whole) gets at the heart of what arts advocates have proclaimed again and again at a time when the recession appears to be over only for the Lloyd Blankfeins of the world.

"Economically, jobswise, and on many other social-advancement and community-development fronts, an investment in the arts is not just putting money into one other area like every other area, but putting money into what is really part of the solution to America's problems," Lynch said. "My hope is that for more leaders and legislators and the president of the United States to understand it that way, then to invest in the arts because it's something that helps advance not just the arts but the whole country."

Going Local

Lynch contends that the political leaders who best understand the arts' economic value work not on Capitol Hill but in the nation's city halls and statehouses. "If you are a mayor or a city council member, you walk out the door and you see the taxis lined up, the restaurants full, and you see the downtown area where the arts are located is safer and better lit," he said. Seeing all of that makes the value of the arts "more obvious. We have to simply make that obvious to the decision makers that are more removed than the local level."

Numbers bear out Lynch's theory. According to Americans for the Arts, in 2009, the states contributed a combined $343 million to the arts, while local governments provided $832 million. The NEA budget for that same year was $155 million.

But with government coffers across the country running low, state and local support for the arts has also been waning in the new year. In New York, Gov. David Paterson and Mayor Michael Bloomberg have proposed significant funding cuts for state and local arts agencies. In Georgia, the governor wants to cut the state's arts budget by more than half. In Phoenix, a proposed sales tax that would have generated $100 million a year for arts groups has been abandoned. In Kentucky, the state arts council recently suspended six grant programs.

In Los Angeles, which is facing a two-year budget deficit of $700 million, a showdown this month between arts advocates and budget-minded politicians ended with a victory in the artists' column. Public outcry has been credited with helping to kill a City Council proposal that would have eliminated guaranteed funding for the Department of Cultural Affairs.

"The community rallied like I've never seen it before," said Danielle Brazell, executive director of the group Arts for L.A. But Brazell laments that arts supporters are forced to go to the mat time after time to defend their slice of the pie, only to see that slice grow rarely. "Budget crises are never new," she said. "Many council members don't always see the nexus between the power of the arts and our creative capital."

Paul Krekorian, elected to the L.A. City Council in December, sees that nexus. As a member of the California State Assembly last year, he proposed a bill that would funnel a portion of sales taxes from arts-related businesses to the California Arts Council, creating the organization's first source of secure funding. But as a newly elected L.A. City Council member, he was one of six officials to initially back the pitch to divert funds from the Department of Cultural Affairs. In a written statement, Krekorian seemed to sum up the pressure that policymakers, even those who support the arts, are under.

"We need to be honest in acknowledging that, at least until the economy begins to improve, every area of city spending is going to be hurt," he said. "I will continue to be a strong advocate for the arts, but at the same time I must also responsibly balance our budget without endangering public safety, basic city services, and other programs integral to our core mandate to govern."

Industrial Theater

Carol Waaser, the acting executive director of Actors' Equity Association, worked alongside other advocates last year to secure greater federal arts funding. But she understands the pressure that politicians like Krekorian are under. She feels it too.

"We're in a very difficult position," Waaser said. "It's difficult to analyze an entire budget and say, 'Look what you're wasting money on when you could be giving it to the arts,' when you see cuts in education, cuts in health care, cuts in all these other basic services. As much as I believe that the arts should be fully funded, we're in a very difficult financial situation right now."

Difficulties or no, Waaser intends for Equity to once again fight for increased government funding. Like Lynch and pretty much every other advocate in the field, she makes the point that the arts are an economic driver. And theater—in particular professional nonprofit regional theater—serves as her choice example for how arts organizations can fuel local economies. Waaser describes how theaters feed local businesses, from lumberyards, where building materials are purchased, to dry cleaners, where costumes are sent, to restaurants, where patrons dine before the show. These are the same examples that she and her staff use when talking to policymakers.

But without government funding, according to Waaser, the health of these theaters is endangered, despite the fact that government support represents such a small portion of most arts organizations' budgets. According to a 2007 study by Americans for the Arts, federal, state, and local government funding combines to provide only 7 percent of the average nonprofit arts organization's budget. But it can be an important 7 percent.

"Government funding, more than anything, is used as operating funds by theaters," Waaser said. "When they're doing capital funding or building their endowments, those are special campaigns. But what the government funding at all levels does is supports operating expenses. When those grants are cut, there go the jobs. Theater, as you know, is a labor-intensive industry."

At this moment in history, framing the arts as a labor-intensive industry may be the best way to ensure their future health.