INTEREST RATES

Interest rates in the United States stand at an unprecedented high level in 1982. The effects of these high interest rates on the American economy are devastating. Sustained high home mortgage rates have brought the housing construction industry almost to a standstill. New housing starts and completions are extremely low, in fact, at the lowest level in 25 years. It is virtually impossible to sell existing housing without resorting to creative financing schemes. Thousands of workers in the housing industry are unemployed as a result of the depressing effects of these interest rates; total unemployment in the entire construction industry has approached one million workers.

High interest rates for consumer financing have depressed new car sales and hundreds of thousands of auto workers have become unemployed. Hundreds of thousands of other workers in auto related industries have also lost jobs. The effects of these layoffs have had a major impact on the fiscal health of state and local governments in areas of major U.S. automobile production, causing the layoff of many teachers and other government employees.

Business in general has been hurt by high interest rates. The Reagan recession has lessened workers' buying power and business inventories have had to be carried for longer than normal. The heavy burden on businesses of financing such inventories has caused numerous business failures and has fueled unemployment, only exacerbating the situation.

High interest rates have also increased the value of the dollar relative to other currencies and, therefore, made American goods more expensive and less competitive in world markets.

High interest rates have also raised the cost of borrowing for state and local governments, as well as the federal government. Public monies used to pay interest costs are not available to finance public services. Every increase in interest costs to governments means either increased taxes or reduced services. Many state and local governments have responded to the high cost of borrowing by reducing the maintenance of existing infrastructure or by postponing new capital improvements. Both responses impede economic development and hurt the local economy.

High interest rates are crippling the American economy and can be best lowered by adopting national economic policies which will end the Reagan recession and stimulate economic recovery.

RESOLVED, the American Federation of Teachers calls upon the President of the United States and the Congress to reverse the economic policies which have been causing high interest rates and recession and to adopt a set of policies which will provide lower interest rates, full employment, and balanced economic growth.