US - Philadelphia, Phoenix and Atlanta are leading a municipal effort to secure a piece of the US$700bn bail-out fund to address to shortfalls in public pension funds and other services such as infrastructure.
Philadelphia mayor Michael Nutter last week presented a hand written letter to the Treasury Department, also signed by the mayors of Phoenix and Atlanta, asking for $50bn as part of the Troubled Asset Relief Program to be used in the form of grants and loans for cities in need.
Nutter also plans talks with assistant secretary of economic policy at the Treasury, as well as senior advisers to House speaker Nancy Pelosi and policy advisers to Barack Obama's interim team.
Dr Christian Weller, senior fellow at think tank the Centre for American Progress, said such help might be available from Barack Obama's $60bn package but it needed to be at least twice as much to make a significant difference.
He added: "The Federal government should leave well alone as the pension
plans are generally working well and if Congress were to help states in this way another regulatory body would be a necessity and that would not be a positive outcome of any grants.
"The money allocated from the bail-out has already been a moving target compared to what it was originally intended for and it would not be publicly acceptable for to be used to bail-out pensions. States can increase their contribution levels and can borrow if they wish depending on their level of fiscal rules."
Alicia Munnell, director at the Centre for Retirement Research at Boston College, agreed: "We all need to take a deep breath on this and realise that the share prices will increase given time and this time next year the market be in far better condition. We do not need to part with any money immediately for state pensions and pay for tomorrow's benefits as there are far more deserving cases for bail-out money to be allocated to like rising health care treatments.
"Before the downturn happened most of the public schemes held assets worth 85% of their liabilities which highlights their ability to cope in these times."
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