American nightmares are never very far away from the American dream. One image in the British Museum’s compendious and absorbing new show of prints from the 1960s to now embodies the perpetual national passion play of light and darkness with startling vividness. Ed Ruscha’s take on the Hollywood sign, pictured not from below but along the brow of its hill, makes it subside into the slope, shrouded in ambient twilight of a smoggy, sulphurous orange. Other images lurk devilishly on the dark side: Andy Warhol’s screenprints of an electric chair repeated in 10 shades like an interior decorator’s sample book — peach and azure, rose and slate — the artist claiming with his usual sly disingenuousness that multiplication dilutes the charge, when the opposite is true. Prettiness kills.

Like the place and time it documents, the British Museum show is not wholly given over to broken dreams. Brightness abounds in the abstractions of Richard Diebenkorn with their patches of California sky blue, and in the swimming pool splashiness of the adopted Angeleno David Hockney. But it’s another work of Ruscha, the swooping and scarlet lines of a gas stop in “Standard Station”, which brought back to me the exhilaration of my first encounter with America more than half a century ago.

A 140ft-high steel globe encircled by 96 fountains, the “Unisphere” was the focal point of the World’s Fair held in New York in 1964. Along with saucer-shaped observatories perched on tall stalks, the globe beckoned Americans into a technologically streamlined, harmoniously connected future, an emblem of the country’s long-lived truism that its destiny lay with the rest of the world: when I first saw the “Unisphere” that summer, mists from the fountains obscured its base so it looked as though it was floating freely in space.

That calculated spirit of levitation was everywhere in the sprawling complex of the Fair, the pet project of the omnipotent parks commissioner Robert Moses, whose earlier attempt in 1939 had been inconvenienced by the war in Europe. A quarter of a century later, the gates of America’s domesticated utopia opened wide again. Satellite national pavilions (scrubbed pine for the Scandinavian countries, for instance) dotted the fairgrounds in anodyne modernist constructions like courtiers around the true sovereign: America’s mighty automobile industry. I rode Ford’s travelling pavement, the last word in people-moving, undulating above the steel and glass structures together with well-upholstered families burying their faces in multi-decker sandwiches. In the General Motors pavilion students stood proudly beside the Studebakers, wearing blazers and broad smiles — themselves dazzling exhibitions of world-beating American dentistry. US technology, engineered for the suburban home, was at hand: a jumbo freezer for every kitchen, in a choice of wheat or avocado. The future was middle class: soda-fizzing, popcorn-buttered, eternally and stupendously American.

But then history pooped the party. Not long after I disembarked on to Manhattan pier, on a steamy stretch of Ninth Avenue slick with the grease of hot dog drippings, I saw a newsboard bearing the mysterious legend: BAY OF TONKIN! This turned out to be the provocation of convenience that allowed Lyndon Johnson to push through Congressional authorisation to prosecute an undeclared war in Vietnam. On a bus in Virginia, where my travelling pal and I had mistakenly seated ourselves in the back, the enraged driver ordered us to sit up front where we belonged.

But even as the first shots were fired (both metaphorically and literally) in what would be America’s decades-long cultural and political civil war, it was impossible not to respond to the raw, exclamatory exuberance of the country. Everything howled and kept on wailing: Allen Ginsberg’s chanted epic of impassioned profanity; Jimi Hendrix’s guitar torturing “The Star-Spangled Banner” in the stoned-out dawn of muddy Woodstock; Lenny Bruce’s satirical outrages on decorum; Coltrane’s sax on A Love Supreme, Janis Joplin’s bourbon-sluiced tonsils screaming through “Cry Baby”.

Independently, but not coincidentally, this was the time too, when something big happened to American art, the moment when, in the critic Leo Steinberg’s perfect phrase, painters such as Jasper Johns and Robert Rauschenberg “let the world back in”. For a decade or more, American art had been dominated by vast heroic abstractions on which artists inscribed their impulses in intuitive, gestural marks. The aim was to take the beholder as far away as possible from the raucous din of American street life into some metaphysical space occupied only by the sublime intersections of line and colour. The heresy of Pop artists such as James Rosenquist, Roy Lichtenstein and Andy Warhol was to adopt the disregarded objects of everyday life, the more garish the better, and present them as independent constructions of shape, colour and chirpy text. They were visual wisecracks but the cracks cut deep. Instead of turning its back on the urban charivari, art kissed up to it and from the sexy union was born a new kind of visual drama.

Not that this meant abandoning the ancient techniques of art-making. On the contrary, the brassier the images, the more painstaking the process of composition. Lichtenstein compulsively painted every Ben-Day dot of his mega-cartoons; James Rosenquist made huge elongated murals as grandiose as the friezes commissioned for government institutions in the late 19th century. But, instead of poses recycled from classical antiquity, Rosenquist scrambled together F-111 bombers, exploding munitions and a small girl grinning under a helmet hairdryer resembling the nose cone of a rocket.

My hunch, or hope, is that the march of the philistines will be catnip for creativity in the arts

The appropriation of the messaging icons of American life — the flag, the map of the US, commercial advertising and supermarket packaging (Rosenquist had been a painter of billboards for Times Square) is often taken to be ironic. But the irony was directed more at the priestly pretensions of traditional and abstract art than at the soup can and the gumball machine. There was — and is — a good deal of celebration about the fierce dynamism of American life in these elaborate capers. In 1969, Rauschenberg was invited by Nasa to go to Cape Canaveral to witness the launch of the Apollo 11 moon mission and the result was two-way rapture. His riotously erupting series Stoned Moon, with its mash-up of launchpad burns and bouncing astronauts, is itself a kind of disorderly lift-off into gravity-free visual space.

American dreaming: the green-light promise of better tomorrows, upward social mobility, a democracy of opportunity, is so ingrained in the national psyche that, until very recently, it has been able to survive the bitterest disenchantments. As American expansiveness retreated into a defensive crouch after Vietnam and Watergate, the hollow hulk of the “Unisphere” was left to decay like a leftover set from Blade Runner, gently rusting on the edge of a Queens cemetery. Somehow, it escaped the wrecking crew, money was found for its lengthy renovation, and in 2010 the restored fountains played once more at its base. Downtown New York arose from the toxic ashes of 9/11; the economy, even the automobile industry, with an infusion of Obama-supplied capital, came roaring back after the crash of 2008.

The inspirational high of the Obama presidency has been succeeded by an administration bent on obliterating all its accomplishments, but it too has presented its politics as a return to an ur-America. The thrusts and counterthrusts of the culture wars may not have been good for the disunited states of America, but they released phenomenal forces of creative energy in image-making. That imaginative rush has not been all nonstop polemics. Between Philip Guston’s scabrous post-Watergate caricatures and Jenny Holzer’s exposure of egregious censorship, making pictures of blacked-out paragraphs, some of the most inventive artists turned out studied exercises in photorealist cool: Chuck Close’s monumental heads, Richard Estes’s storefront reflections, organised with the formal compositional geometry of a latter-day Poussin.

But American art, for all its flirtation with minimalism, is no more capable than its writing or politics of simmering down into resignation. Every crisis in the world of power has triggered another round of fighting images, sometimes wry, sometimes as fulminating as an evangelical sermon. Amid all the kitschified Marilyns and Maos manufactured by Warhol’s prolific assembly line, it’s easy to forget how razor-sharp his most acute takes on the meretricious vanities of the powerful could be. The most luridly gripping of his images of Richard Nixon borrowed the leering face from a Newsweek magazine cover but then printed his skin in the colour of his wife’s dress taken from the same photograph: a curdled, luminous teal.

In contemporary America, activist art is alive and kicking. But many of its most powerful images draw on older traditions of visual preaching and teaching. The psychiatrist-artist Eric Avery, who treated patients broken down by the onslaught of Aids, went back to expressionist woodcuts for “Blood Test”, a devastating print of a raised arm and fist clenched for the needle, revealing through deeply incised lines all the veins and arteries. Kara Walker turns the genteel form of the 19th century silhouette inside out for her images of sexually brutalising mischief inflicted on slaves by their masters. Her “No World” takes a sailing vessel, not unlike the one featured in Turner’s “Slave Ship”, and retains as well the image of a drowned body lost in the waves, but has a pair of black hands rise from the waters to raise the ship high above the swelling sea. Other pictures reprise themselves and the inaugurating years of post-abstract art, but now in a wistful strain, none more affecting than Ruscha’s ghostly “DEAD END” signs, coloured with the decrepitude Donald Trump could have used as an emblem for his visions of industrial desolation.

But we’re not in Kansas any more, Toto. The hard-right Republican majority in Congress has long assumed that the “liberal” in “liberal arts” tells them all they need to know about the irreligiosity — and thus the un-Americanism — of the humanities. Notorious examples of offences against piety and decorum in the arts, such as Andres Serrano’s “Piss Christ”, are routinely trotted out to justify the elimination of public support for the arts. Universities other than those instituted around a religious ethos are suspected as citadels of subversion where lefty academics hound patriotic young conservatives into silence. So the National Endowment for the Arts, along with the National Endowment for the Humanities and the Corporation for Public Broadcasting — stigmatised as “elite” institutions, notwithstanding that millions flock through the museums and galleries and watch in numbers only dreamt of by the likes of Fox — are targeted for total defunding. Before his resignation this week as director of the Metropolitan Museum of Art, Thomas Campbell pointed out in The New York Times that the defunding of the NEA will make it impossible for provincial museums to come up with the insurance needed for loans to prospective exhibitions. The result will be the stunting of national culture, the closure of public broadcasting stations, the withering away of arts and humanities in exactly those parts of the country the Trump administration purports to champion.

How will American art respond to the assault? Doubtless there will be many among the galeristas who will greet fat tax reductions for the rich and the gross inflation of prices in contemporary art with rejoicing. There will be others who may retreat once more into an airy world of pure aesthetics.

My hunch (or hope) is that the march of the philistines will be catnip for creativity in the arts and that a new era of public engagement is upon us. One thing American art does brilliantly is inventive disrespect, and the relentlessly self-congratulatory vanity of Donald Trump presents the fattest target imaginable for its satirical artillery. The challenge, as with all such imaginative counter-attacks, is the capacity to project the message beyond the halls of college and museum and into the street where it counts. Prints lend themselves perfectly to poster polemics but the most effective challenge may yet come from creative adventures in the digital media, where inspired derision coupled with the defence of truth can go viral. Should that happen, the complacent dismissal of resistance art as the self-indulgent playtime of a defeated “elite” will die on the faces of the powerful. Aux armes, les artistes!

Simon Schama discusses ‘The American Dream’, at the British Museum on March 17. For 25 per cent off full-price adult tickets to the exhibition use promo code FTweekend, or quote FT weekend offer at the ticket office; americandreamexhibition.org

‘The American Dream: Pop to the Present’, sponsored by Morgan Stanley and supported by the Terra Foundation for American Art, is at the British Museum from March 9-June 18