Achieving a 21st century social compact requires that we attend directly to the locus of democratic decision-making, which in turn requires a rethinking of the relationship between state and federal responsibilities. The center of gravity for the areas of health and justice, and closely related areas like education, is state and local government. Policy work over the last few decades has paid insufficient attention to this fundamental feature of the U.S. system. It is time for us to invest in all the ways our federal system can be an asset, and to rebuild effective approaches to governance that knit together the many layers of our system.