I don't disagree in principle, but one important change from the Mayor > POTUS days is that the population is so much more mobile. That has a number of effects, one of which is that if I figure I'll only live in a given state/locality a few years, why *not* vote for both tax cuts and spending increases and let the poor saps who move here after I leave deal with the aftermath in a few years. I theorize that's part of the reason that you see the West Coast states hit so hard by never ending cycles of "tax less / spend more" ballot measures. Plus, who the heck wants to get to know local issues, budgets, politicians, etc every few years, rather than keeping an ongoing knowledge of federal politics. I'm not so sure radically more localized control would lead to more responsible policy outcomes.

On the business side, technology has enabled such tremendous economies of scale that just about everything but dry cleaners and Chinese restaurants are part of corporations with nationwide market penetration. Even if federal policy outcomes are 2x bad compared to 1x for state policies, many companies would prefer one set of worse regulations, taxes, laws over fifty less bad but different policy environments, let alone if more was handed at the county/city level. So they're all for federalization.

With a nationwide labor market and most firms operating nationwide, I'm not sure it's practical anymore to push so many policies down to the local level.