Social Security's 2027 cost-of-living adjustment (COLA) is projected to reach approximately 3.5%, driven by President Trump's tariff policies and the Iran war's inflationary effects on energy and broader consumer prices. This marks a historic moment, as a COLA of this magnitude hasn't occurred in 30 years, following a modest 2.8% increase in 2026 also boosted by Trump's policies.
Republicans are showing rare openness to raising taxes on higher earners to address Social Security's funding crisis, with lawmakers like Senator Bernie Moreno and Representative Tom Cole supporting proposals to increase the payroll tax cap. The program faces depletion by the early 2030s due to demographic shifts, prompting bipartisan discussions on revenue solutions to prevent automatic benefit cuts.