The Feds take in the most money, so much that even in their wildest schemes, they cannot spend it all. Thus they pass a large quantity of funding down to States, local governments and even NGOs to spend on project of dubious merit.
In short, it's violating the principle of subsidiarity.

There's a reason why Europe's industrialised countries used some welfare programs to influence social problems and the U.S. did not; Europe had no uncolonized West where the poor could go and grab natural ressources to fix their economic problems.
The reason is federalism and an American culture distrustful of centralized power and too diverse to provide a foundation necessary to support such a social contract.