Question

In what primary way are the Social Security cost-of –living adjustments a COST  to our economy and to our society ? Why do you think so? (300-500 words)

Answer 1

Social security cost of living adjustment is the increase in social security benefits in monetary terms, to keep pace with rising inflation.

For eg if inflation in the economy has increased by 2%, then the government increases the amount it gives away as social security also increases by 2%

Although it is good for the recepients as their purchasing power remains same and they are equally better off, however it is like an additional cost for the government and the economy.

It is firstly not only a loss to the economy because of rising inflation, but secondly it also imposes a monetary cost to the government by making it pay more to the social security recipients. It is a two way loss as the incomes are falling in real terms and also expenses are increasing.