When the Supreme Court ruled last week to uphold a congressional statute requiring the National Endowment for the Arts (NEA) to consider "general standards of decency" in awarding grants to artists, opponents of government censorship howled with rage. Karen Finley and the three other performance artists who sued the government for denying their grants in 1990, when the legislation took effect, had not gotten the Court to side with them. In the view of the artists and their supporters, the struggle for artistic freedom had been mortally wounded.

Oddly enough, however, the Court's strange and ambiguous resolution of this volatile controversy is more of a victory for advocates of artistic freedom than it is for those who would censor art that offends religious and sexually prudish sensibilities. Although the 8-1 decision appeared to support the government position, it also limited the Congress's power -- and warned it against going further.

For those with short memories, a little history is required. The 1990 legislation arose out of the hue and cry that followed NEA funding of two projects that the Court described, with some understatement, as "provocative." In 1989, the Institute of Contemporary Art at the University of Pennsylvania used $30,000 of its NEA grant to fund a show of homoerotic (or, in the view of some members of Congress, pornographic) works by photographer Robert Mapplethorpe. Likewise funded that year was Andres Serrano's "Piss Christ," a photograph of a crucifix immersed in a jar of the artist's urine, for which Serrano had been awarded $15,000 by the NEA-funded Southeast Center for Contemporary Art.

In the wake of the firestorm, some legislators proposed eliminating the congressional appropriation for the NEA entirely. Others recommended restrictions on grant awards that would have shot down a wide range of applications. In the end, Congress adopted what the Supreme Court called "a bipartisan compromise between members opposing any funding restrictions and those favoring some guidance to the agency." The result was the legislation challenged by Finley and her colleagues; it requires the agency, when judging grant applications, to "take into consideration general standards of decency and respect for the diverse beliefs and values of the American public."

When it came time for the NEA to implement these standards, the agency softened the line even further. Then-NEA chair John Frohnmayer was on record as opposing censorship of the arts, but he realized that he had to do something to ward off more-radical congressional assaults on his agency. Instead of setting unambiguous funding rules that would have imposed a regime of censorship at the NEA, he merely required that the members of the advisory panels reviewing applications represent geographic, ethnic, and aesthetic diversity. In his view, this simple expedient would somehow fulfill Congress's mandate.

Frohnmayer's intentionally muddled strategy appears to have been endorsed by six of the eight justices who upheld the legislation. In a majority opinion more remarkable for its obfuscation than for its erudition, Justice Sandra Day O'Connor noted that as the NEA interpreted the legislation, it did not establish a mandatory ban on funding for "indecent" projects but simply added a decency "consideration" to the grant-making process as one factor among many. Thus interpreted, said the Court, this legislation "does not preclude awards to projects that might be deemed `indecent' or `disrespectful.' " The Court, agreeing with the NEA interpretation, judged the legislation "advisory" and concluded that it "imposes no categorical requirement" that "indecent" grant applications be denied. Such applications might be disfavored, and it might be harder for those applicants to win funding, but there was no actual ban.

The Court's attempt to justify its reasoning was nearly impossible to follow. The majority opinion weaved between precedents, dodging apparent obstacles with deft abandon. Typical was the way the Court dealt with its 1995 opinion in Rosenberger v. Rector and Visitors of University of Virginia, in which the justices had ruled it a violation of the First Amendment for a public university to refuse to pay for the printing of a Christian student newspaper with money from a student activities fund. The Court held that this was impermissible viewpoint discrimination; yet in the NEA case, the justices said it was okay to discourage art that expressed certain viewpoints by refusing to award it public funds. The doctrinal justification for treating the two situations differently, the Court said, was that a student newspaper is a "public forum" aimed at airing unpopular speech, whereas the NEA grant program turns the government into an arts patron, forcing it to consider such subjective criteria as "excellence" and "decency."

A remarkably candid observation about the genesis of the "decency clause" helps explain this tortured logic. "The legislation was a bipartisan proposal introduced as a counterweight to amendments aimed at eliminating the NEA's funding or substantially constraining its grant-making authority," the justices pointed out. And if the Congress chose to deal with this hot-potato issue by fudging, then the High Court was going to do the same. The six justices for whom O'Connor wrote were obviously concerned that if they invalidated this legislative compromise, Congress would come up with a much more draconian attack not only on the NEA but on the First Amendment.

So the Court chose to resolve the controversy by declaring that Congress had not, in fact, attacked the First Amendment at all, and had only given gentle "guidance" to the NEA. The Court drew a distinction between "direct state interference with a protected activity [art]," which the Court said Congress had not done, and "state encouragement of an alternative activity consonant with legislative policy," which Congress had done and had the power to do. Put more simply, since Congress was supplying the money for this artistic activity, and since it had not set out to create a "public forum" where any and all comers would receive funding, it had the power to establish the broad criteria governing grants. An artist who failed to get a grant for an "indecent" project, where the indecency constituted one of several grounds for denial, was not being forbidden to perform his or her art, or to secure funding from other, nongovernmental sources.

Even as it upheld congressional authority, the Court issued a veiled warning to legislators to go no further in limiting freedom for artists, even government-funded ones. In a nod to the First Amendment, the majority wrote that while it did not see a "realistic danger" of impermissible censorship in the challenged legislation, it might intervene "if the NEA were to leverage its power to award subsidies on the basis of subjective criteria into a penalty on disfavored viewpoints." The Court did not explain with any precision why the denial of funding for Finley did not constitute "a penalty on disfavored viewpoints," but it was apparently signaling the NEA and Congress that the legislative compromise should be applied with a light hand, lest a future test case come out differently.

But in its effort to avoid a confrontation between Congress and the First Amendment, the six-member faction led by O'Connor evaded the central issue. No one understood this better than Justices Antonin Scalia and Clarence Thomas, who voted to uphold the legislation but protested that the majority was interpreting the statute in a manner so wishy-washy that it was effectively nullified. "The operation was a success, but the patient died," wrote Scalia in a concurring opinion, agreeing with the majority's result but not with its reasoning. "It sustains the constitutionality of [the statute] by gutting it."

According to Scalia and Thomas, Congress had meant the "decency clause" to prohibit funding of works deemed contrary to middle-class sensibilities, and the legislature had the power to do so, the First Amendment notwithstanding. It was "preposterous to equate the denial of taxpayer subsidy with measures `aimed at the suppression of dangerous ideas,' " the two justices claimed. "Avant-garde artists such as [Karen Finley] remain entirely free to épater les bourgeois; they are merely deprived of the additional satisfaction of having the bourgeoisie taxed to pay for it."

Only David Souter dissented from the decision to let the "decency clause" stand. Taking a purer free-speech position than the O'Connor group, he argued that if the government chooses to fund artistic projects, and then denies funding to projects that offend some people's sensibilities, it is engaging in viewpoint discrimination, otherwise known as censorship. It was ironic, he wrote, that the legislation that had established the NEA to "create and sustain . . . a climate encouraging freedom of thought, imagination, and inquiry" was being manipulated "to deny recognition to virtually any expression capable of causing offense in any quarter."

Yet Souter's less ambiguous resolution did not convince the O'Connor group to risk a confrontation with Congress. If there was going to be a huge First Amendment battle over Congress's right to censor through the power of the purse, it was not going to be in this case, where there was a way -- however unsatisfying -- to dodge rather than fight.

Only the future will tell whether the Court protected or battered the First Amendment in this case, but what really happened is far more complex than anyone in this battle seems prepared to admit. It was not a great day for artistic freedom, to be sure, but it was not quite the First Amendment's Armageddon, either.