What types of decisions are best handled by the federal (national) government? which are best handled by the states? which are best handled by local governments?

Issues of "high politics" are best handled by the national government, while "low politics" are best handled by state and local governments.

Explanation:

In political science, the concept of "high politics" refers to matters related to survival of the state itself. These matters are usually national security and international relations with other nation-states. Given that the federal government has a nation-wide view and it is internationally recognized as the lawful representative of the nation-state, matters related to high politics are best handled by the national government.

On the other hand, "low politics" refers to those matters that aren't completely vital to the survival of the state. This means everything else not related to national security or international relations, like economy, health, education, etc. Low politics matters are best handled by states and local governments. State-wide affairs, like infrastructure, roads and schools, are best left to state governments. Local affairs, such as law enforcement and waste collection, are best handled by local governments.