Federalism was a major political issue in 1995 and 1996 with presidential candidates, congressional leaders, governors, and the courts weighing in with proposals to shift responsibility from Washington to states and localities. There was more talk than action, but as the second session of the 104th Congress wound down in the late summer, a major proposal to block grant the 61-year old Aid to Families with Dependent Children program was enacted. This enactment allowed both Democrats and Republicans to take political credit, and gave major responsibilities to the states to implement the new approach to a former entitlement program. Five themes characterized the year: (1)federalism was once again a salient issue; (2) deficit reduction and devolution were bound together; (3) the U.S. Supreme Court continued to reexamine and possibly redefine the legal parameters offederalism; (4) state officials became more visible political actors in Washington, D.C.; and (5) states provided key policy and management leadership.