During Bush's term, it was widely assumed that President Muskie, with his remaining appeal across the disparate Democratic factions, would run again in 1980. However, the former president made it clear following the 1978 midterms that he would not run. Speculation briefly turned to former Vice President Byrd, but Byrd's previous membership in the Ku Klux Klan and his past votes against civil rights legislation ended any serious discussion of him running and Byrd ruled himself out only a month after Muskie did.
The Democratic nomination thus was open for the first time since 1960. Candidates across the political spectrum, from South Dakota Senator George McGovern (representing the progressive, dovish of the party) to New York Congresswoman Shirley Chisholm to Minnesota Senator Walter Mondale (President Humphrey's political protege and political heir apparent) to Alabama Governor George Wallace (in his final presidential bid) crowded in for the chance to correct what they regarded as an aberration from perpetual Democratic control of the White House.
Since the chaotic 1968 convention, the party had drastically refined how it chose its presidential nominee to allow the nominee to be chosen by primary voters instead of party elites like it had in the past. Primaries and caucuses with delegates awarded on a proportional basis had replaced the patchwork that allowed Humphrey to win the nomination in 1968 without running in a single primary. While the 1972 and 1976 primaries had technically been under this system, it was never really paid attention to since Humphrey and then Muskie had such an overwhelming lock on the nomination that such primaries were a formality.
But 1980 showed that, outside of McGovern (who had been on the committee that was in charge of reshaping the nominating process to be more small-d democratic), the presidential candidates had very little idea of how the system worked on their own end, with missteps by contenders like Mondale (who wrote off contending in primaries in the old Confederacy) and Florida Senator Reubin Askew (whose campaign quickly fell apart once it became apparent that Askew's name had not been entered into enough primaries following the South Carolina primary to mathematically be able to win the nomination) causing the primary campaign to become a slow-moving train-wreck for party leaders.
McGovern, as the only primary candidate with a detailed understanding of the new process, was able to take advantage of the fractured primary landscape and quickly poach formerly pledged delegates to withdrawn candidates to be the only nominee able to get the nomination. Reluctantly, the other candidates withdrew in the name of party unity and McGovern became the nominee. He chose Askew as his running mate, hoping to appeal to offset his image as a liberal dove with a southern moderate on the ticket.
McGovern, for all the "Humphrey Democrats" disliked him, came out swinging in the general election. He hammered Bush on the president's push to create an international stabilization force for Iran, playing on the public's post-Vietnam skittishness to becoming involved militarily abroad, with the DNC printing bumper stickers saying "'Khuzestan' is Arabic for 'Vietnam'". The president also was hit with questions surrounding his cabinet, after Secretary Nixon was implicated in a scandal surrounding the discrepancies between the high payment he received for speeches and the income he reported for such on his tax returns.
But Bush quickly struck back, saying McGovern would be the "peacenik-in-chief" if elected and played up his foreign policy successes, especially in China and the economic recovery that had begun under his watch. He was doubtlessly helped by organized labor choosing, for the first time since before the Great Depression, to largely sit out the presidential election campaign and not aid the Democratic nominee.
Bush won more electoral votes than his first election in 1976 despite his margin of victory narrowing, with the overwhelming Democratic turnout in the northeast (where McGovern's anti-war views were especially popular) being largely responsible for the anomalous result. McGovern's campaign also failed spectacularly in translating an increase in the Democratic vote from 1976 into electoral votes, notably taking California, Oregon and South Dakota (McGovern's home state) as givens and then watching in shock as Bush won all three after an especially strong push on the west coast by the Republican ticket in October and McGovern lost his senate race (that he was running for in addition to the presidency) to conservative Congressman James Abdnor.