The judgement of such issues as personal as art is almost always too subjective to be evaluated according to taste. Art, by its nature, reaches some and offends others. Popular appeal has not and never should be the standard to which art is held, least of all by the federal government. Imposing decency standards would do just that; such standards would be subjective and evaluative according to taste and appeal. Whereas the government should encourage all forms of expression, such a policy - whether executed or not - could counteract and impair these aims by discouraging and deterring certain forms and types of artistic expression.
Art should be recognized by the government as something that is good for society. As well as contributing to society culturally, art unifies and bonds people through common vision. It is a forum for expressing public concerns and interests as well as thoughts and ideas. Art has always expressed the mood and current of the times. Some of the most controversial works have been at least as useful in evaluating society in a historical context than less-risqué ones. The intellectual controversy that has always surrounded art is healthy for society. So while some politicians and moralists have throughout history tried to censor certain types of art, it has likewise proven to be important to reject taste and moral standards.
In addition, since it is the government and not a private organization or collector that is responsible for this source of funding for the arts, it is that much more important for the standard of freedom of expression to be maintained. Were the funding from a private source, any standards, whether of decency or another type, would not constitute such a breach with the artists' right to freely express themselves. But it is the responsibility of the government to protect the interests of all of society. Since finding universal standards of taste that are common to all of society would be nearly impossible, it is not within the right of the government to impose these standards on the NEA. The issue here is about funding, not about taste. Public money should be put toward public interest - it is in the interest of the public to preserve this type of freedom of expression.