The next two chapters provide a framework for the study of retrenchment, setting the stage for a detailed examination of the Reagan and Thatcher records. To be persuasive, accounts of welfare state change must combine microscopic and macroscopic analysis. They must consider both the goals and incentives of the central political actors and how the institutional rules of the game and the distribution of political resources structure their choices.

This chapter outlines the peculiar nature of retrenchment as a political project. For politicians eager to win reelection, seeking cutbacks in social programs raises considerable risks. Such cutbacks impose concentrated costs in return for diffuse benefits, and there is substantial reason to believe that concentrated interests possess marked advantages in political conflicts. To make matters even more difficult, retrenchment advocates must contend with an imbalance in voters' reactions to losses and gains; transfers of resources tend to induce more resentment from losers than gratitude from winners.

An understanding of retrenchment politics must start from an appreciation of this distinctive political problem. This chapter will focus on the nature of this distinctiveness and the strategic options available to retrenchment advocates that may make their problems more tractable. The following chapter will consider how the broader context – patterns of interest-group representation, institutional structures, and preexisting policy designs – influences the prospects for implementing these strategies.

As a preface, however, I discuss the concept of retrenchment itself. This is crucial, because fuzzy conceptions of retrenchment have encouraged confusion about exactly what has happened to these welfare states.