This thesis assesses the arguments of Paul Pierson, whose publications have shifted the welfare state debate from explaining the growth of modern welfare states towards questioning welfare state retrenchment. He has done so by arguing that the theories that explain welfare state expansion (old politics) can not explain welfare state retrenchment; we need new theories (new politics). Pierson’s arguments are tested on the recent case of German welfare state retrenchment – the reform package Agenda 2010. Old politics comprises the three main theories that have been employed to explain the development of the modern welfare states: “Logic of industrialism” links the growth of the welfare state to economic development; “new institutionalism” argues that strong states are likely to produce strong welfare states and “left power resources” attributes welfare state expansion to the power of unions and left parties. According to Pierson, researchers have implicitly used the inverses of these models when they aim to explain the “opposite” of welfare state expansion, namely welfare state retrenchment. New theories are needed, Pierson claims, because politicians operate in a terrain that the welfare state itself has fundamentally altered. His arguments draw heavily on the institutionalist school of thoughts and his focal point is that the existence of the welfare state has feedback effects, meaning that “public policies are not only the result of but important contributors to political process”. In other words, the welfare state must be viewed as an independent variable. One of the clearest examples of such feedback effects is the formation of new interest groups linked to particular social programs. These groups have replaced left parties and unions as defenders of the welfare state, according to Pierson. Another feedback effect is that the existence and popularity of mature welfare schemes makes politics of retrenchment qualitatively different from politics of expansion. The latter is about taking credit for popular politics, the former about avoiding blame for unpopular reforms. The concept of blame avoidance and the role of new interest groups are in other words the two main components of the concept new politics. This thesis tests the explanatory power of inverted versions of the “old” theories in comparison with Pierson’s new politics in the German case. Thus, the overarching research question is: Do “old” or “new politics” best explain recent welfare state retrenchment in Germany?