As a new field of academic enquiry, applied history has a unique opportunity to learn lessons from other applied fields. In this essay, we set out how we think applied historians can learn from past successes and mistakes of applied economists and economic policymakers in their use, and abuse, of economic theory and economic history. What we call here the “New Applied History” has great potential to improve the way policymaking is conducted. But only if its practitioners understand the power, and limitations, of theory. We apply our ideas to the case of budgetary policymaking in the United States.