Despite Bush's convincing victory, the new president faced an uphill struggle. The Democrats still controlled Congress despite Republican gains in the congressional races in 1976 and the new president quickly ran into a brick wall after the Congress rejected his spending reduction that had been a key part of his campaign. The summer of 1977 passed with Congress and the president fighting viciously over Congress' repeated rejections, for the most part, of Bush's economic agenda. By fall 1977 however, a compromise was reached. Bush, to the fury of several of conservatives in the party, largely acceded to letting Congress run domestic affairs while he exercised the president's traditional prerogative of almost unrestrained handling of foreign affairs.
Although aided by one of the most capable Secretaries of State of the Cold War era in Richard Nixon, Bush faced a challenging term on the international stage. His shift away from Humphrey's enthusiastic support of Israel had led Egyptian President Anwar Sadat to agree to United States-brokered negotiations with Israel. However, negotiations broke down in a spectacular fashion due to the personality differences between Sadat and his Israeli counterpart, Menachem Begin, embarrassing the president. Bush also was in charge when South Vietnam, despite massive American aid ever since the withdrawal of combat troops in 1970, finally fell to the North Vietnamese advance in late 1977. Finally, in 1979, the Shah of Iran, a strong American ally in the region, was toppled in a revolution. The ensuing vacuum of power in Iran destabilized the region and Iraqi strongman Saddam Hussein took the opportunity to march into the oil-rich province of Khuzestan, adding Iraq to the growing Iranian civil war.
Bush, for the most part, handled the crises well. In Iran, the president adopted a "wait and see" approach, although following the Iraqi invasion in 1980, Bush and Nixon began to seek international support for a stabilization force to be sent to the region and attempted via back-channels to convince Hussein and the leaders of the various Iranian factions to come to the peace table. But the president's true triumph was the long-overdue recognition of the People's Republic of China, something that the United States had pointedly refused to do since the PRC's victory in the Chinese Civil War over 25 years ago. China itself was undergoing a transition after the death of Mao Zedong and Bush's outreach accelerated the ouster of Mao's successor, Hua Guofeng, in favor of reformist Deng Xiaoping.
Domestically, the economic picture brightened a bit. Bush's relaxation of environmental standards, while infuriating environmentalists, increased domestic oil production. This, alongside the Arab world's reluctant end to the post-Yom Kippur War reduction in oil trade to the United States in exchange for military support for their regimes following the Iranian Revolution, largely offset the rise in global oil prices following the invasion of Khuzestan in the United States.
The end of the 1970s saw the culmination of the poisonous mix of politics and religion that had been brewing since the 1960s. First, an increasing number of evangelical Christians had, urged on by fundamentalist pastors and activists hoping to reverse the legalization of abortion, women's liberation and other changes brought about in the 1960s had returned to the political sphere for the first time in two generations. These "values voters" pushed a hard-right agenda that was greatly at odds with both the political establishment and the cultural milieu of most Americans, especially those outside the south. Attempts by this group to push its way into the political mainstream were largely unsuccessful when campaigns began in 1980.
On the opposite side of the spectrum, the saga of the People's Temple movement, a new religious movement influential in the left-wing haven of San Francisco ended in tragedy. Leader Jim Jones could count on the support of most of the San Francisco establishment as well as a few Bay Area legislators before 1978. But that year, the truth of the People's Temple emerged after FBI investigators looked into the group: it was a malicious cult and Jones, far from the spiritual man he claimed to be, was a drug-addled deviant who proclaimed himself to be Jesus Christ incarnate. Following Jones and several other prominent People's Temple members' indictments, a shootout and subsequent siege occurred at the main temple in San Francisco. Six days later, the vast majority of the surviving occupants, over 450 in total, committed suicide after being told to by Jones (who also committed suicide).
