The Social Security Act was signed into law by President Franklin Roosevelt in August of 1935. Not all features that are part of today's Social Security program were included in the original version — notably, the cost-of-living adjustment (COLA) to align benefits with inflation.
From the program's inception, benefits were adjusted as needed through acts of Congress.
Enter the Great Inflation, which began in 1965 and would last until 1982.
The inflation rate soared from less than 2% annually in the early 1960s to nearly 6% by 1970. Inflation during these years was largely driven by policymakers' erroneous notion "that there existed a stable, exploitable relationship between unemployment and inflation," according to an account of the Federal Reserve's history from the Federal Reserve Bank of St. Louis.
Government spending on social programs and the Vietnam war complicated the inflation picture, along with President Nixon's formally ending the exchange of dollars for gold by foreign central banks in 1971, according to the St. Louis Fed.
