Leave Entitlement Spending to States

A very interesting analysis about shifting entitlement spending, Dr Miron, but it does pose a further question, about the nature and cause of the altruism of the states. You write at the end that

If states were to run their own welfare, retirement and health programs, they might worry that excessive generosity might attract the poor, the sick and the elderly. So they might moderate—but not gut—these programs.

This possibility is to be understood within the context that, contrary to conventional wisdom that

states would engage in a ‘race to the bottom,’ in which each adopts minimal benefits to keep taxes low and avoid becoming a ‘welfare magnet’ [...] states routinely pursue policies that are more generous than required by federal law.

Thus, states exhibit altruism, contradicting the race-to-the-bottom theory. Thus, most states would, in fact, provide welfare, retirement and health benefits even without federal provision or compulsion.

Excepting anomalies within this framework, states will operate within an ‘Aristotelian agenda’, being neither excessive in welfare provision nor deficient, but exercise prudential judgement in arriving ‘at the right course’—a consummation devoutly to be wished.

Granting the above dichotomy within a federal system, how does one account for the recklessness of Washington while conceding greater oversight from the states?