Adan Garfinkle, writing in The National Interest's blog, is in the process of producing a profoundly interesting series examining the nation's current dysfunction and problems, and proposing a way to think about correcting them. Thus far he has written four parts (which you can read as Part 1, What's Wrong and How to Fix It, Part 2, Political & Institutional, Part 3, Corruption and Plutocracy, and Part 4, Television and Politics).
These are not easy pieces, with glib, simplistic solutions. Our national dysfunction is not simple; it is very complex, rooted in fundamental changes in our culture. If I were to try to summarize it in a short statement, I would note that democracy, as a form of government, can only work if the culture of the citizens emphasizes duty as much as rights, and we as a nation seem to have lost much of the sense of duty and exalted too much the concept of rights. The last person I can recall stating this balance correctly was President Kennedy: "Ask not what your nation can do for you; ask what you can do for your nation".
In any case, I strongly recommend reading these pieces and thinking about them. No one, of course, has all the answers, but Garfinkle seems to me to have many good points.