The Careyvolution
The Nixon presidency remains one of the greatest eras in American history, and one of the better presidencies for certain. He showed he was a statesman, a truly great statesman, by ending the Vietnam War and the opening of China, and he showed he was a truly great administrator with the Comprehensive Healthcare Act and the creation of a single-payer healthcare system[1]. Other laws passed during his presidency included effective gun control legislation[2] and the tethering of welfare to inflation[3]. Despite the revelation of corruption in the Nixon administration, he remains quite highly ranked by the public and scholars alike. However, these successes earned the ire of the rising right wing of the Republican Party. Ronald Reagan, former Governor of California, was immensely popular with this wing, and he was immensely charismatic as well. Facing off a divided field with competitors like John B. Anderson, Howard Baker, John Connally, and George H.W. Bush, Reagan had a lead after Iowa and held on to this lead to win the nomination, despite a few wins by Anderson in the northeast[4]. In contrast, the Democratic Party saw a long, entrenched battle between Mo Udall and Scoop Jackson, which was only won by Jackson after a narrow win in California. To add to this, Eugene McCarthy announced an independent run in 1976, winning over members of the New Left who didn't like Jackson's foreign policy. Ultimately, despite doubts over his more right-wing views, and despite all of Jackson's attempts to try to paint Reagan as a right-wing radical, the fact that he was a Republican associated him with the Nixon administration; this, along with New Left discontent with Jackson's foreign policy views, gave Reagan a landslide.
However, almost immediately after Reagan's inauguration, the good times of the Nixon administration ended. Stagflation came back with a vengeance in late 1977[5], and the long gas lines of the Yom Kippur War came back with a vengeance. The fact that Reagan's right-wing views clashed with those of the Democratic-controlled Congress didn't help him one bit. Reagan's tax cuts failed to get past the House, and his supply-side economics died with it. To make matters worse, South Vietnam fell to its northern counterpart in 1978. It's unsurprising that there were large Democratic gains in Congress in the midterms. Reagan's second term would see the economy falter even more as his approval rating fell even further. A whistle-stop tour, along with several excellent speeches, didn't help him enough, and the brief unrest Iran faced by Islamists further occupied his time at the expense of his attempts to increase his approval rating. In 1980, his defeat looked inevitable.
The Democratic primaries had a clear frontrunner from the very beginning. Hugh Carey, the pragmatic governor of New York, was acceptable to the liberals and moderates in the Democratic Party. He began with a lead and held it for the rest of the primaries. His primary opponents such as Jerry Brown were swept aside with ease. The party had learned what an extended primary could do, and as such, were intent on avoiding it. When it came to the general, Carey emphasized his role in keeping New York solvent even with "Reagan's failures". He attacked Reagan for the bad economy. But Reagan shot back. Reagan called Carey a "Northern liberal" and Reagan ran an inspiring optimistic campaign. However, it wasn't enough for Reagan to turn this year into this victory, and Carey won, if by a smaller margin than he would have liked. However, both the House and Senate were solidly Democratic, and it appeared that Carey could take the nation in any direction he wanted.
However, left-wing dreams were dashed when Carey announced several tax cuts for the rich, if a fair bit smaller the ones Reagan proposed. Carey was able to push it through Congress successfully despite protests by liberals. To add to this, Carey proposed several increases of infrastructure spending along with allowing it to be funded by ways other than with the gas tax[6], and with liberal support, this too was able to get through Congress, and bridges and the like were built across the nation. However, by 1982, although inflation was under control, the economy was still in a hole. As such, the year saw Republican gains on scale of the Democratic ones of 1978. However, after that dreadful year, recovery began at a breakneck pace, and with that came Carey's approval rating. By 1984, the economy was as good as it was during the Nixon years.
Though many liberals proposed primarying Carey in protest against his tax cuts, the quick recovery from the recession killed that proposal, though Jerry Brown would flirt with running. As for the Republican primaries, John B. Anderson had consolidated support across the establishment after the failure of Reagan. However, he was very moderate for the Republican Party, and his next biggest competitor, hard-right conservative Phil Crane, hammered him on those issues. Anderson getting endorsed by Gore Vidal only served to hurt him. In what shocked many, Crane won the Iowa caucuses by a considerable margin, and though Anderson won New Hampshire, Crane had won a narrow lead, one which he would retain, if by the smallest of margins. After he won the California primary, and with it the nomination, Anderson gave a half-hearted endorsement of Crane that didn't help among Anderson supporters. As such, despite Carey's lukewarm support among liberals, Carey won a landslide victory.
The first part of Carey's second term went much like his first. However, in 1986, the economy fell into recession once more following the Savings and Loan Crisis. Though it was nothing like the previous one, it hurt Carey significantly. The 1986 midterms would see further Republican gains. Though it was not enough for them to gain control of either chamber, Carey was seen as a sitting duck by many. However, the economy did improve and Carey saw his approval ratings rise to sixty-three percent by the time his successor was inaugurated; whether it was enough for the Democratic Party to retain control of the presidency was an open question.
On the Democratic side, with token opposition, Vice President Birch Bayh won the nomination despite doubts over the electability of his liberalism. As for the Republican side, Senator John Tower, a moderate conservative and one of the first post-Reconstruction southern Republicans, was seen as acceptable for all of the Republican Party. In the general election, Tower attacked Bayh's liberalism as well as the bad economy, while Bayh attempted to connect Tower with Reagan, with some success. The final polls suggested that Tower would win by a comfortable margin. As it turned out, these polls were wrong; though the final election was still a victory for Tower, it was by less than two percent. Many Democrats were disappointed that they lost an election they believed they could have and should have won, and the blame was drawn on Bayh's liberalism.
[1] This is something Nixon pushed IOTL, but was stopped by the Watergate scandal.
[2] This is another thing Nixon pushed IOTL.
[3] From OTL.
[4] This was where most of his strength came from in 1980.
[5] IOTL, stagflation only came back in 1978. The reason it came earlier is because the 1975-76 recession was butterflied away.
[6] The fact that the unpopular gas tax is the only way money to be spent on infrastructure is raised is one reason infrastructure spending is virtually nil IOTL.