Another thought on your fine post.
We were talking elsewhere upthread about Bush's proposed model for transistioning out of Social Security. Basically, treating some people as vested and allowing those who were not vested to opt out. In the federalism scenario, you should be able to have many different ideas come to the fore about how or whether to do a "social security" type entitlement.
But what do you think? It seems to me that simply closing new enrollment to these programs (however you get there, see above) is the best education of all! The only reason people depend on these programs and plan their lives around them is because they exist (and earners are forced to fund them).
In the "return to federalism" scenario, only the Red states would tend toward accepting fewer state services in exchange for less taxation. And only the Red states would even consider returning to a system of individual responsibility, with a reliance on private (targeted, accountable and local) charity to provide a community-based safety net. (I would truly love to be able to better exercise my God-given obligations to help my fellow man by not having my charitable giving forced by and outsourced to the government.)
Those who didn't like that would stay in statist states or move there. Then they could figure out what to do next when the state's monies ran out. If the state could keep going because it had a lot of very wealthy people willing to fund statist policies, okay.
But I do think you can accomplish this without having the need for people who love socialism to understand or agree that socialism presents problems. They just get educamated by TOUGH LOVE, the Thatcher reality that you eventually run out of other people's money, if that comes about.
My point is that I don't believe...or rather, I fear, that Federalism has little chance of gaining a foothold in the first place, given the divided nature of the populace.
We see these first little "green shoots" of Federalism with the state's lawsuits in opposition to the healthcare debacle, gun rights, etc. If those take root (pardon the pun), we may be able to save this union and your propositions may have the opportunity to bear fruit. However, those lawsuits may also be merely a band-aid on an amputation, if further steps are not taken. And finally, those lawsuits may be the death knell of this once-great country if they fail to result in a return to Federalism. Remember this battle is not taking place in a vacuum, the other side will be fighting each of these steps tooth and nail.
Is that enough mixed metaphors? :o)