Congress proved itself inept at adjusting Social Security benefits for inflation and even more inept at adjusting funding for changing demographics.
Why shouldn’t the payroll tax rate along with the taxable wage be adjusted automatically each year to what is actuarially necessary to keep Social Security solvent?
Before 1975, Social Security had no cost‑of‑living adjustments tied to inflation. Instead, Congress occasionally passed general benefit increases, often years apart, whenever lawmakers decided benefits had fallen too far behind rising prices. These increases were:
- Irregular — sometimes 2 years apart, sometimes 7
- Political — required new legislation each time
- Not tied to CPI — no formula, no automatic trigger
Examples of these pre‑COLA increases include:
- 1950: 50–100% increase
- 1952: 12.5% increase
- 1954: 13% as fixed dollar amount $6.00
- 1959: 7% increase
- 1965: 7% increase
Automatic COLAs were created by the 1972 Social Security Amendments, but the first one did not take effect until:
- June 1975 — 8%
This was the first true COLA, because it was the first increase based on the Consumer Price Index (CPI‑W) rather than a special act of Congress.
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