Thank goodness for Mitch McConnell. Thank goodness Republicans in Congress didn’t “pull a Newt.” Welcome, Clinton Era II.

That’s the conventional wisdom about the budget deal reached July 31. Commentators are emphasizing the statesmanship of the Senate minority leader. Without the Kentucky senator’s diplomacy, the radicals in the Grand Old Party might have played too rough and shut down the government, as House Speaker Newt Gingrich did in the 1990s, rather than giving in to President Bill Clinton on the budget.

Therefore, we have avoided calamity. If the tea party leaders, sons of Newt, keep quiet, we may even move into a balmy period of growth and narrowing deficits, just like during the late 1990s, the thinking goes. This attitude is reinforced by McConnell’s loud suggestion that Gingrich’s intransigence damaged the Republican “brand.”

Gingrich recently said that McConnell represented a “Washington version of reality that’s just not true.” And he’s right. The conventional wisdom is contrived. The debt-limit deal, which will cut more than $2 trillion in spending over the next decade, is impressive. However, a little more Newt would have got the bond market something it would like even better: a tougher and more enduring commitment from U.S. leaders to reduce our debt and deficits.

Consider what actually happened in the 1990s to Gingrich, the Republican Party and the budget deficit. He became speaker in 1995 brandishing the “Contract with America,” which promised to amend the Constitution to require a balanced budget. Rather than give in to a weak budget proposal, Gingrich forced a government shutdown not once, but two years in a row.

In the short term, Americans didn’t approve. CNN polls in July 1995 showed that 44 percent of Americans said Republicans were doing a better job of handling the budget than Democrats were. By Nov. 15 of that year, with the first shutdown underway, respondents had flipped, with 49 percent of Americans approving more of the Democrats’ approach and 33 percent preferring the Republican way.

But evidence that the shutdowns did longer-term damage to Gingrich, the party or the country is scant. Gingrich achieved much after the shutdowns, including negotiating welfare reform and some of the budget deals that led to the federal surplus a few years later.

Those who criticize Gingrich’s tactics in budget negotiations are forgetting the big story. President Clinton didn’t come into office as an austerity champion. He came to Washington to rearrange health care and promulgate Labor Party-style workplace reforms. Had Gingrich and the Republicans not been there, and had Democrats ruled both Houses, Clinton would have heeded deficit doves such as Labor Secretary Robert Reich and adopted a gentler plan for balancing the budget. Reich repeatedly criticized Clinton for “caving” on the deficit.

But thanks to Gingrich and others ― especially the House Ways and Means Committee chairman, Bill Archer ― Republicans were able to win an agreement from the White House and Democratic legislators to overhaul welfare. The budget-reducing regime that Clinton and Gingrich had agreed to narrowed the deficit each year. Eventually, Archer even got Clinton to cut the capital-gains tax. Government analysts expected the deficit to shrink, but not as much or as steadily as it did.

Those who warn against “pulling a Newt” point to disappointing results for Republicans in the elections of 1996 and 1998. But those slippages had more to do with other issues, especially the sheer inadequacy of Senator Bob Dole as a presidential candidate and the even larger damage caused by Republican hypocrisy in attacking Clinton over the Monica Lewinsky affair. The sight of serially married philanderers in the GOP going after the president for philandering did hurt the Republican brand. In their zeal to get Clinton, Republicans squandered their chance to threaten more shutdowns and scare the president into reforming Social Security, along with welfare.

Now, after a few weeks’ vacation, what everyone ― the bond market, the Chinese government, the credit-rating firms ― will look for from Washington is a signal that the U.S. will commit to a long-term reduction in deficit and debt and introduce a proposal even more rigorous than the agreement reached Sunday night.

A plan to do so might include a balanced-budget amendment of the sort written into the Contract with America. It may involve a new monetary law that gives the Federal Reserve less discretion in setting interest rates. It certainly should begin with a reform of Social Security. President Barack Obama’s own record, whether campaigning or promulgating his health-care policy, suggests that he, like Clinton, isn’t temperamentally inclined to go along with such ideas without mega-pressure from the opposing party.

Senator McConnell and House Speaker John Boehner won’t be able to apply that pressure without the help of that rash group, so capable of “pulling a Newt,” called the Tea Party.

By Amity Shlaes

Amity Shlaes, a senior fellow in economic history at the Council on Foreign Relations, is a Bloomberg View columnist. The opinions expressed are her own. ― Ed.

(Bloomberg)