More than 800,000 American children spend some time in foster care each year, most because they have been victims of child abuse or neglect. The families of 3.5 million children are investigated or assessed for alleged maltreatment each year, and more than 900,000 children are determined to be victims--three-quarters of them neglected, and one-quarter physically or sexually abused. To assist these children, the nation's child welfare systems spend more than $25 billion per year, of which more than $12 billion comes from the federal government. Yet there is broad consensus that these systems, despite the extraordinary efforts of many committed managers, supervisors, and frontline workers, fail to produce the results needed. Too many of the children who encounter them remain unsafe, and too many do not have basic needs such as education and health care met. Most important, far too many of these children and youth are left without the permanent, supportive family every child needs to grow into a healthy and productive adult. The current economic crisis will create ever-higher demands on already over-stretched child welfare systems--and even more reason to ensure that every dollar invested in child welfare is spent wisely. The incoming administration and Congress have an extraordinary opportunity to drive real reform of child welfare nationally, by changing federal policies that are fundamentally misaligned with the goals they are supposed to promote. This paper provides recommendations that most likely will solve these problems such as: (1) Change federal fiscal policy to better promote permanence and well-being; (2) Promote innovation, evaluation, and widespread implementation of policies and practices supported by strong evidence; and (3) Improve both oversight and support of state child welfare systems.