First off, they'd have to determine which "folk" they were supposed to be supporting: real traditional music performed in traditional style, traditional music "revived" (forced into modern garb), or contemporary singer/songwriter stuff that pretends to be old or just doesn't fit other genres?

"Folk" as we know it has been largely divorced from its original context. It used to be contemporary music (however old its origins) that people just sang and played to enjoy themselves or to accompany their work. Public performance was on a very limited scale: front porches, parlors, dances, weddings, funerals, local celebrations. No special funding was required to perpetuate the music--it was self-perpetuating.

Even in modern times, no special funding is required to perpetuate the music--whoever wants to perform it will do so, for whomever will listen. If they want to make a career of it, that's another matter entirely--and completely at odds with what folk music really was. Whatever the public wants to hear and preserve, it will spend money on. Consider how many people are willing to shell out $50-100(US) to hear some flash-in-the-pan band perform in an arena!--the money is there if the demand is. So really, we're talking about whether the government should spend money to artificially subsidize and popularize art forms which the public has turned its collective back on.

And should this money be directed to professional performers who choose to perform in these genres or not. If so, I contend that the "folk" performers who perform in contemporary styles should be excluded from this funding--they should have to contend with market forces and public demand for their chosen form of music just as all other commercial performers must. Preserving our musical heritage in its historic form is more worthy of governmental spending, since commercial entities have little interest in doing so. Viewed from the "historic" argument, governmental spending for art museums, opera and classical music is also justified. A separate argument must be made for funding contemporary opera and orchestral music--or modern art.

As for the inequity--funding opera but not folk music--you can't ignore that folk music can be performed anywhere by anyone; it takes no formal organization, no significant cash outlay or even publicity. The same can hardly be said of opera. And even though opera is typically attended by the wealthier sort, without governmental funding it would become virtually impossible for any opera house to survive in modern times; opera would very quickly disappear. (Nor can we ignore that wealthy people have a lot of pull to ensure governmental funding continues--an unjust reality.) Folk music may remain neglected, but it is in no danger of dying out for lack of funding. We'll probably see a resurgence of interest in the next ten or twenty years, another revivalist movement, particularly as times get harder and people start to rebel against commercial domination.

I also believe that if the government funds artists, the works they create should become the property of the people, free of copyright restrictions. It's a basic "work for hire" situation. Anyway, copyright and "folk" are inconsistent notions, so choose your poison.