If I ran the NEA, I would immediately dismantle all "artist" grants (solely because I've never been offered one myself) and use that money to create more diverse arts programs for inner-city schools. Just kidding. I'd definitely dismantle the grants because, as mentioned above, the awarding of said grants is obviously rigged and in desperate need of restructuring. I would not use the extra money in schools, however, because most kids wouldn't know "art" if it marched up and slapped them in the face. I would instead implement and fund various initiatives to examine "the sex lives of insects cited in the works of Marlowe and Shakespeare" and collect "recipe tips from noted female writers -- Aphra Behn to Naomi Wallace." Now that's money well spent on worthwhile projects -- just like my esteemed predecessors used to do.
I would also support a number of dance programs because, let's face it, dance gets the short end of the stick in the arts, yet it's really fun to watch and people often get naked. I like music too, so I would make sure money gets funneled off to a variety of regional orchestras and that sort of thing. Plus, I'd also underwrite big concerts in the park like Elton John and Simon & Garfunkel used to give. I'm sure Sting would be up for it -- promise him that he's saving a forest somewhere, and that guy will play bare-chested for hours.
And lastly I would fund theater like crazy. Every project you can think of, from crowd-pleasing ideas like more and more musicals based on pop tunes (maybe something using the music of ABBA) to more inspired but experimental notions such as my all-Asian version of "Raisin in the Sun" (I'm off the all-white version now -- that was just stupid).