The proceedings of a 3-day conference, discussing the relationship between government and the arts in the United States, are presented. Issues that will confront the arts in the 1990s were identified and policy recommendations were suggested. Six basic principles were reflected in many of the discussions: (1) a flourishing artistic life is in the best interests of a democractic society and therefore government support is appropriate; (2) the principal selection criterion for government funding should be excellence; (3) government policies and private actions that threaten artistic freedom in U.S. society should be vigorously opposed; (4) government arts programs should support new works of promise even if they may prove controversial; (5) public funding policies must be administered according to the principle that no artist's work may be compromised, suppressed, or unrecognized because of race, ethnicity, gender, sexual preference, or political or religious belief; and (6) artists and arts organizations that receive public support must be responsible for creating the highest quality work and educating audiences to become critically aware. Findings and recommendations for the National Endowment for the Arts (NEA) and state and local arts support follow these principles. The American Assembly participants recommended methods to improve the case for the arts and its presentation to the public and how the government can effectively address the cultural requirements of underserved communities. New international cultural policies and tax policies also are recommended. The report concludes with recommendations for improving arts education. A list of conference participants is attached. (KM)