Social Security’s cost-of-living adjustment will be 5.9% for 2022, reflecting accelerating inflation in the United States, the Social Security Administration announced Wednesday.
Every year, the Social Security Administration increases payouts to reflect changes in price levels. Indeed, the 5.9% hike for 2022 — which is the highest in four decades — comes as year-over-year inflation in the United States surges to 5.4%.
The Social Security Administration explained that the rate hike will affect 64 million Social Security recipients and 8 million Supplemental Security Income beneficiaries.
The adjustment is in line with rates witnessed early in President Jimmy Carter’s administration — 5.9% in 1977 and 6.5% in 1978. After surging to 9.9% in 1979 and 14.3% in 1980, the adjustment began to decline once President Ronald Reagan and Federal Reserve Chairman Paul Volcker implemented measures to stabilize inflation.
Social Security — which forces current workers to fund current retirees’ incomes through payroll taxes — is plagued with solvency issues. Unless Congress raises taxes or cuts benefits, the program’s trust fund is projected to run dry by 2034. According to the Committee for a Responsible Budget, the most recent benefit adjustment could “deplete the program’s trust fund a year earlier than projected.”
Beyond the reality of rising inflation, higher Social Security payouts have implications for the federal government’s spending habits.
Democrats are seeking to enact a $3.5 trillion reconciliation bill that combines provisions of President Joe Biden’s American Jobs Plan and American Families Plan — a move that would further increase the role of the federal government in social welfare spending. Conservative lawmakers — including Sen. Rand Paul (R-KY) — are raising concerns that the expenditures will push the national debt above $30 trillion.
“People are saying we’re going to give you free college, free cars, free cell phones, free this, free that,” Paul recently explained on the Senate floor. “Everything in life will be free; you won’t have to work anymore. The problem is there are ramifications. Money doesn’t grow on trees; money’s got to come from somewhere.”
“We are spending money right and left. The Right spends it on military adventure, the Left spends it on welfare. The compromise that always happens around here is that Right comes together with Left and they all agree to … spend it on both.”