America's ignominious withdrawal from Vietnam and the Watergate scandal created a crisis of confidence in national politics unknown since the Great Depression. The Second Indo-Chinese War brought home to Americans the truth that severe limitations existed on their nation's ability to determine the course of global events. Not only did it appear that the forces of international communism had scored a clear-cut victory, but also that in the process of defending its perceived interests, the United States had transgressed many of the values and principles for which it claimed to be fighting. The collapse of the Government of Vietnam (GVN) in 1975 left America exhausted and divided; hawks, doves, and all those in between felt betrayed and contaminated.

Americans' sense that they had been lied to and deliberately deceived during crucial periods in the Vietnam War created an attitude of deep cynicism toward government at all levels, but particularly the federal government. In the wake of the Watergate scandal, this cynicism became pervasive and acute. The president of the United States and his aides had participated in a criminal conspiracy and then obstructed justice by covering it up. Nixon had, moreover, corrupted other government agencies – the FBI, for example – and flaunted the Constitution. Although Nixon's success was only temporary, the average American's confidence in the political system and the institutions that anchored it was shaken to the core.

To make matters worse, the economic situation continued to deteriorate in the mid-1970s.