As the nation approached its bicentennial anniversary under President Gerald R. Ford (1974-77), it was reassured that the Constitution had worked: a president guilty of grave offenses had been made peacefully to leave his office. The American people had become aware, however, in the Vietnam conflict, of the limits to their nation's strength and of questions as to the moral legitimacy of its purposes. They had also learned, in the Watergate scandal, of the danger of corruption of the republic's democratic values. The nation's cities were in grave difficulties; its nonwhite peoples still lagged far behind the whites in income and opportunity; unemployment seemed fixed at a level of more than 6%, which, for minorities and the young, translated into much higher figures, and inflation threatened to erode the buying power of everyone in the country.

Most of these problems continued to plague the American nation during the presidency (1977-81) of Jimmy Carter, Democrat of Georgia, who defeated Ford in the 1976 election. Carter brought to the presidency an informality and sense of piety. He arranged negotiations for an Egyptian-Israeli peace treaty (signed in 1979) and guided the Panama Canal treaty through narrow Senate approval (1978). Carter also had to deal with shortages of petroleum that threatened to bring the energy-hungry U.S. economy to a standstill, with soaring inflation and interest rates, with the taking (1979) of U.S. hostages by Iranian militants, and with an international crisis precipitated by Soviet intervention (1979) in Afghanistan. His popularity waned as problems remained unsolved, and in 1980 the voters turned overwhelmingly to the conservative Republican candidate, Ronald Reagan.