I am working on a scenario where Joseph McCarthy stops drinking and becomes a teetotaler in the late 1940s. He becomes far more coherent and therefore dangerous. One of the things he does is secretly contact the Soviet Union and work out an arrangement that will benefit the both of them.
In 1950, the US 8th Army is wiped out by the PLA at the Battle of Chongchon River in Korea, thanks to an increase in Soviet supplied radios, airplanes, trucks and artillery. Audie Murphy, who was serving in Korea at the time, is captured and brainwashed by Chinese intelligence. He is presumed dead and posthumously awarded a second Medal of Honor. Korea is united under the auspices of Kim Il Sung.
McCarthy enthusiastically goes on the hunt for "communists" at home, fueled by the paranoia and anger of the American public after the debacle in Korea. Some of his most prominent allies in the Senate are southerners like John C. Stennis and Strom Thurmond and the anti-Red block in the House and Senate move to block all civil rights legislation in exchange for Southern support against a mostly imaginary communist menace.
Also, at this point, McCarthy essentially gets leftist, "communist" tendencies classified as a mental illness and wholeheartedly embraces the use of lobotomy on suspected communists, or those with communist tendencies, or frequently, those individuals who are his primary detractors. Tens of thousands of people are lobotomized under the auspices of this program, and many more are involuntarily committed and kept under heavy sedation. All of this occurs with the enthusiastic backing of the silent majority and the National Guard crushes riots that start taking place at home. Military conscription is expanded and then supplemented by a re-established Civilian Conservation Corps, which essentially becomes an alternative to prison and a pseudo-welfare system for the poor. The media is kept tightly controlled by Congress and self-censored by Hollywood. New anti-sedition laws are passed and enforced. Military spending shoots up dramatically during this time as well.
In Russia, Lavrentiy Beria quietly has Khrushchev, Molotov, Malenkov, Zhukov and Bulganin purged before taking over as premier of the Soviet Union.
The KGB, picking up on trends in the US, trains and arms former civil rights groups, which quickly become terrorist organizations. Bombings and shootings rise at an alarming pace, funded mostly by the KGB and through illegal narcotics sales domestically. The violence drives a deeper wedge between people of different races and provokes a large, bloody backlash by the KKK and other hate groups. The CIA, being too stupid to pick up on the signals, assumes the problem comes from a cabal of traffickers in South America. Congress, going on the information the CIA has provided them, orders a brutal military crackdown in Latin America. US troops are deployed to the area, helping strongmen brutally oppress their populations.
The KGB is giddy at this development and uses this opportunity to fund insurgent groups there and elsewhere. Many African nations fall to communism while the US is distracted. Forced out of Indochina after the Korea debacle and determined not to have Algeria fall, the French launch a campaign of genocide in Algeria in order to keep it in the fold.
In China, Mao Zedong dies in a mysterious accident while on a morning swim at the beginning of his 100 Flowers movement, leaving no instructions as to how to proceed. Zhou Enlai and Liu Shaoqi take over and rapidly begin to modernize the Chinese economy, all while appearing conciliatory to the Soviets. Audie Murphy turns up alive and is released into US custody. Murphy, now a Chinese mole, is promoted to Colonel in the US Army.
The Chinese detonate their first nuclear weapon in 1961. The rest of the 60s sees massive riots and terrorist attacks by various civil rights activists. In many areas of the South, near open warfare along racial lines begins occurring.
In Southeast Asia, many nations begin falling under Communist influence after Vietnam. Burma, Thailand, Cambodia, Laos, Malaysia and Indonesia fall to Communism. Only a US sponsored military coup in the Philippines prevents it from falling to Communist influence.
The PLA crushes the Indian Army in a brief war over control in the Himalayas. India loses a subsequent adventure in Pakistan, which causes anti-Muslim riots to erupt there.
Afghanistan "democratizes" under the auspices of the Chinese. It negotiates an exchange with Pakistan, giving up the Baloch areas of Southern Afghanistan in exchange for the rest of the Pakhtunwali and NWFP. Their first action as a democratic nation is to expel all the Hazara, which causes a brief civil war, followed by a genocide.
The communist takeovers in Southeast Asia and the troubles in South Asia results in a wave of new immigration to the US. President JFK intentionally settles these people in the South and Midwest, which are most troubled by racial tensions. His goal is to drive a wedge between the blacks and whites there. This succeeds a little too well as a large white separatist movement springs up in the South, made up mostly of white people who believe the Federal government has abandoned them. The new immigrants are essentially enslaved, as they must serve a stint in the CCC without pay in order to gain citizenship. This also creates even more racial tension and violence, which is largely ignored by the Federal government. JFK founds the Peace Corps as an offshoot of the Defense Department.
In the meantime, things in the Soviet Union are going well. They beat the US into space and in 1966, the first cosmonauts land on the moon. A similarly placed American effort two years later ends up exploding halfway to the moon. The huge blow to morale means that President Robert F. Kennedy is almost not elected, but he succeeds, triumphing over Richard Nixon.
The UK and France, without US objection to decolonization, are sucked into an endless mire of colonial wars in Africa and are rendered mostly useless.
RFK, buoyed by the partial American success in Latin America, orders a military intervention in the American client state of Iran, in order to buoy up the Shah. The Iran War is a disaster for the US politically. However, the US does manage to get Pakistan and Afghanistan on its side. The USSR threatens to invade Afghanistan if the US does not get its bases out of Afghanistan and there is a tense standoff where the world is pushed to the brink of nuclear war. Finally, the US agrees to withdraw its bases from Afghanistan. There is a small victory as it successfully brings Pakistan into the fold, causing India to fully align itself with the Soviet Union. The Chinese, panicking a bit, begin warming up to the US. Since the US is in need of allies in the East at this time, the State Department begins making overtures to the Chinese, which are spearheaded by Congressman and former 4 star general Audie Murphy.
An Egyptian and Syrian invasion of Israel goes better than expected. The Israelis use a couple of 100 kiloton nuclear weapons to vaporize Syrian columns outside of Tel Aviv and threaten to nuke the Aswan High Dam if Egypt doesn't retreat behind the Suez Canal at once. This prompts a coalition of Muslim powers to start developing their own nuclear weapons independent of the US and Soviet Union. A joint-US/French/Israeli strike fails to take out the experimental reactor located in Mauritania and OPEC launches an oil embargo against the US in response, while the Gulf nations force many American military assets out of their territory. The Arab League detonates its own nuclear weapon in 1975 as Europe and North America falter under the strain of an oil embargo. Iran falls to communism.
RFK's second term domestically is marred by draft riots at home and multiple economic and foreign policy failures. Richard Nixon is elected in 1976 by a landslide and immediately embraces the principles of his mentor, Joseph McCarthy. At the same time though, the American Left has grown emboldened and is far less tolerant of McCarthyism than it was in the 1950s. Nixon is implicated in a scandal and is thrown out of office shortly before the 1980 elections, which sees Audie Murphy elected to the American presidency. Murphy, who is still a Chinese mole, reaches out to China, transferring technology and resources to them. At the same time, President Murphy, only partially realizing the senselessness of the Cold War, covertly signs a "Gentleman's Agreement" with the Soviet Union, the terms of which ensure that all hostile activities between the two powers will be kept strictly conventional.
The Soviets land on Mars in 1982, causing further demoralization in the US. Both the Soviets and US are working on advanced anti-ballistic missile systems at the moment, which will essentially enforce the terms of the treaty by protecting one side or the other from the French, British and Israelis, who do not know about the existence of the Gentleman's Agreement. The Chinese sign a separate Gentleman's Agreement with the Soviets at around the same time.
Despite the existence of the Gentleman's Agreement, morale in the US is at an all-time low and tensions between the US and USSR begin to build up throughout the 1980s and 1990s. During one series of armaments reduction talks at Prague Castle in 1994, a brawl breaks out between US and Soviet diplomats, resulting in several Russian diplomats falling to their deaths after being thrown out of the windows. This Third Defenestration of Prague results in a diplomatic shitstorm that is fortunately smoothed over by American diplomats (or so they think).
At 2 a.m, April 10th, 1994, Soviet forces begin pouring out of the Fulda Gap, across the North European Plain, into the Balkans, into the Middle East and and across the Amur and Ferghana Valley into China. The Americans and Chinese are shocked to find that the Soviet forces are vastly technologically superior to their own and are caught with their pants down.
The Soviets push NATO forces to the Atlantic and are on the outskirts of Beijing and Jerusalem by the end of the month. The UK, France and Israel fire their nuclear arsenal at the USSR, but the Soviets take only a handful of hits as their ABM net is fully functional. In reprisal Soviet troops invade Britain conventionally and nearly destroy France and Israel before moving on into Spain, Italy and Turkey. The Israeli nukes do hit areas without ABM coverage, such as Mecca, Baghdad and the Aswan High Dam.
The Soviets behave like Mongols, laying waste to everything in their path and killing millions of civilians in order to deny retreating NATO forces usable infrastructure. China is pushed to the breaking point, but is convinced not to launch its arsenal after Soviet forces are defeated at the Battle of Shanghai. At the same time, US forces land in Norway, Spain and the British Isles. A followup operation retakes Japan from Soviet occupation, but not before millions of Japanese starve to death thanks to an enforced famine. The Soviets are suffering from overextension, heavy casualties and the breakdown of civil society at home. Additionally, the Americans and Chinese have rapidly embraced their model of network-centric warfare and are using it against them with gusto.
India and Pakistan settle their differences by conducting a full strategic exchange with one another, which effectively wipes out both nations and results in more than a billion dead. Meanwhile, civil wars rage in Sub-Saharan as colonial regimes are finally overthrown, only to run into legions of communist sympathizers.
Finally, in late 1998, the US war effort collapses with massive draft riots in dozens of US cities just as NATO forces are about to take Leningrad. The US signs a peace agreement with Russia while it sends its troops home to impose martial law. An exhausted China settles for peace with the Soviets as well, settling for a reversal of the Treaty of Aigun.
The Soviet Union, having taken very heavy casualties in WW3, collapses into a bloody civil war. Its armies, with the exception of its nuclear arsenal and some MVD troops, are left to rust. China, while it does not collapse, has suffered grievous casualties in WW3 (over 150 million dead) and is essentially unable to do anything. Much of Europe is depopulated and the survivors are dying from UXO and easily treatable diseases.
The US becomes mostly isolationist again as a response to WW3, leaving few resources for the reconstruction of the Eastern Hemisphere. The Peace Corps, overwhelmed by the PTSD cases they find in Europe, begins using the old and cheap standby of lobotomy on Europeans, as most of their psychiatric hospitals have been destroyed and stocks of psychotropic drugs simply do not exist in high enough amounts to treat afflicted populations. Meanwhile, thanks to no belligerent bothering to issue sufficient quantities of prophylactics besides the US, HIV has spread like wildfire across Eurasia and Africa, leaving hundreds of millions of people to die a slow, lingering death.
Modern day America ITTL is a harsh and paranoid place to live. It is mostly dominated by military-oriented socialism. Lobotomy and other forms of psychosurgery are frequently used to control "unruly" people and the memories of racial tension are still severe in many parts of the US. Conscription into the military, Peace Corps and CCC is still widely practiced. Thanks to McCarthyism, followed by the HIV epidemic, there was no Hippie movement and definitely no Sexual Revolution. Years of playing second fiddle to the USSR has left the US without its vibrancy, making it a cold, dull place to live.
The Soviet Union is a disintegrating state, falling apart at the seams from civil disorder, demographic collapse and an HIV infection rate in excess of 40%. China is healing from WW3 and is littered with more UXO than can be possibly quantified. Africa is still a war-torn shithole (as usual) and civilization on the Indian Subcontinent and Middle East has been effectively destroyed.
Ultimately, the greatest travesty ITTL is that Ayn Rand wins the Nobel Prize in literature. That's what makes it a true dystopia.