Watergate seriously eroded public confidence in government, and the task of Nixon's successors was to restore that confidence. Faith in Washington was not easily regained, especially when, after just a month in office, Gerald Ford pardoned Nixon for any crimes he may have committed while he was president. Although the pardon was intended to put the Watergate scandal behind the nation, many saw it as politics as usual. Jimmy Carter's ensuing promise never to lie to the American people helped to get him elected, but he did not work well with Congress and lacked the leadership the country needed.
Ford's challenges. Gerald Ford faced the same economic problems as Nixon and was no more successful in dealing with them. The unexpected combination of inflation and high unemployment continued to plague the country. The president focused on inflation and launched the Whip Inflation Now (WIN) campaign, a voluntary effort that called on Americans to save their money rather than spend it. The campaign, with its red and white WIN buttons, had little effect. Ford also reduced spending and the Federal Reserve Board raised interest rates, but the recession worsened and unemployment reached nine percent. Only then did the administration shift gears and try to stimulate the economy through a large tax cut.
In foreign affairs, Henry Kissinger stayed on as secretary of state, providing continuity for American foreign policy. Détente with the Soviet Union remained a high priority, and in late 1974, Ford and Brezhnev met to work out the basis for the SALT II agreement (the negotiations of which had begun in 1972 and would continue into the Carter administration). In August 1975, at a summit conference held in Helsinki, the two leaders agreed to recognize the postwar boundaries of Western and Eastern Europe. Brezhnev also agreed to permit more Soviet Jews to emigrate, a decision helped perhaps by Congress having linked trade with the Soviet Union to Jewish emigration. In the Middle East, Kissinger continued his shuttle diplomacy of traveling back and forth between Israel and Egypt, begun after the 1973 Yom Kippur War. In the fall of 1975, Israel agreed to return most of the Sinai Peninsula, which had been captured during the 1967 Six‐Day War, to Egypt. The Ford administration also presided over the final act of the Vietnam War. In April 1975, the president asked Congress for $1 billion in aid for Vietnam, Laos, and Cambodia and was refused. However, by that time, no amount of money could have prevented the North's victory, and news footage of the South Vietnamese civilians desperately trying to get in to the American embassy in the hours before Saigon fell provided some of the most enduring images of the end of the conflict.
The election of 1976. Ford faced a serious challenge for the Republican nomination from Ronald Reagan, the conservative former governor of California. Although Ford was named the presidential candidate at the convention, the platform that he ran on reflected the views of Reagan and the right wing of the Republican Party — an increase in military spending, opposition to détente, a balanced budget, and school prayer. To ensure conservative support, Senator Robert Dole of Kansas was chosen as the vice‐presidential candidate. The unlikely Democratic nominee was Jimmy Carter, who had served one term as governor of Georgia. He struck a responsive chord among the voters with his honesty, easy‐going style, and the fact that he was a Washington outsider. To balance the Democratic ticket, Carter chose Senator Walter Mondale of Minnesota — a man with strong liberal credentials and experience in Congress — as his running mate.
The election did not generate a great deal of public interest. In fact, voter turnout was the lowest in almost 30 years. Carter was able to rebuild the New Deal coalition of labor, minorities, the South, and urban voters with an important twist. His success in the South, where he won every state except Virginia, had less to do with his own background than the overwhelming support he received from African‐Americans. Ford, on the other hand, was strong among whites, consistently so across the Midwest and West. Although by the end of the campaign he was able to close the large lead that Carter had in the polls, it was not enough. Carter won by nearly 1.7 million popular votes, and a comfortable margin in the electoral college, with 297 votes to Ford's 241.
The economy and the energy crisis. The economy remained the country's main domestic issue. Carter reversed Ford's policy of dealing with the inflation side of stagflation by first attacking high unemployment. Carter found, as his predecessors had, that there was a serious cost for increasing spending on public works to provide jobs — inflation soared. In fact, during his four years in office, inflation doubled in part because of a new round of oil price increases by OPEC and also because using interest rates to moderate the problem was not effective. Interest rates were so high that both new home construction and the sale of older houses dropped sharply.
Even before oil prices went up for the second time in the decade, the United States was in the midst of a major energy crisis. In the spring of 1977, the president submitted a comprehensive package of energy legislation to Congress that included the creation of the Department of Energy, the use of higher taxes and tax incentives to encourage conservation, the development of new sources of oil and natural gas, and the promotion of alternative fuels and nuclear power. Only the Department of Energy was approved; furthermore, an accident at the Three Mile Island nuclear plant in March 1979 discredited nuclear energy in the United States. OPEC price increases in 1979 raised the cost of a barrel of crude to over $30 (compared to $3 dollars in 1973) and resulted in gasoline price hikes to more than a $1 a gallon (as opposed to 40 cents in 1973) and the return of long lines at the gas pumps.
Carter's foreign policy. Carter was a strong advocate of human rights as an element of American foreign policy. He sought better relations with the black nations of Africa, strongly opposed the apartheid policies in South Africa, and pressed countries such as Chile and South Korea to improve the treatment of their own citizens as a criteria for American support. Human rights violations in Nicaragua, for example, prompted the administration to end military and economic aid to the Somoza regime. Additionally, despite considerable conservative opposition, the president persuaded Congress to ratify two treaties that provided for the transfer of the Panama Canal and the Canal Zone to Panamanian control in 1999.
In June 1979, Carter and Brezhnev signed the SALT II accord, which reduced the nuclear arsenals of both nations. But the progress of détente between the two nations came to an abrupt halt in January 1980 when the Soviet Union invaded Afghanistan to support its threatened communist government. SALT II was withdrawn from Senate consideration, an embargo on grain shipments to the USSR was put in place, and the president called for an international boycott of the 1980 Olympic Games in Moscow. None of these actions brought about any change in Soviet policy.
The Middle East represented the high point and the low point of the administration's foreign policy. Carter was responsible for the signing of the first peace treaty between Israel and one of its Arab neighbors, Egypt. After the unprecedented visit of President Anwar el‐Sadat of Egypt to Israel in 1977, both Sadat and Israeli leader Menachem Begin were invited to the United States to work out a permanent settlement to their countries' differences. Under the Camp David Accords (September 1978), Israel completely withdrew from the Sinai Peninsula and normal diplomatic relations were established between Israel and Egypt. The formal peace treaty was signed in Washington in March 1979.
Carter's success at Camp David was offset by his failure to resolve the Iranian hostage crisis. In November 1979, Islamic militants overran the American embassy in Tehran and held 52 Americans hostage for more than a year. The president seemed to be at a loss on how to handle the situation. He tried negotiations, and when those failed, he ordered a rescue attempt that turned out to be poorly planned and unsuccessful. His inability to free the hostages was a major factor in his defeat in the 1980 election. Iran let the hostages go on the day that Ronald Reagan was inaugurated president (January 20, 1981).