Iran was experiencing a major uprising that severely damaged its capability to produce oil, contributing to an oil crisis that subjected gas prices in the United States and elsewhere to rampant inflation. In January 1979, shortly after Iran's leader Shah Mohammad Reza Pahlavi fled the country, Iranian opposition leader Ayatollah Ruhollah Khomeini returned from a 14-year exile. He installed an Islamist régime that was hostile towards the United States. In the spring and summer of 1979 inflation was on the rise and various parts of the country were experiencing energy shortages. Lines at the gas pumps grew longer and longer and President Carter was blamed for the problem.
Carter's approval ratings were very low. Gallup polling put them at 28%. Some other polls had them even lower. In July, Carter returned from Camp David and announced that he was reshuffling of his cabinet. In a national television address, he delivered a very pessimistic speech whose downcast demeanor resulted in it being called the "malaise speech" by the pundits. The speech caused a brief upswing in the president's approval rating, but his decision to dismiss his cabinet members was widely seen as an act of desperation, causing his approval rating to plummet back into the twenties. Some Democrats feared that their party would suffer an electoral disaster unless there was a new name at the top of the ticket. felt it worth the risk to mount a challenge to Carter in the primaries. Potential replacements for Carter included New York Governor Hugh Carey and Wisconsin Senator William Proxmire, but they decided not to run. Carter was challenged for the nomination however, and the challenger was Massachusetts Senator Edward M. Kennedy.
The youngest of the Kennedy brothers, Edward Moore "Ted" Kennedy had been asked to take his brother Robert Kennedy’s place at the 1968 Democratic National Convention, after Robert Kennedy's assassination in June of that year. He refused to run. When he ran for Senate Majority Whip in 1969, many believed that this would be a springboard for a run for the White House in 1972. But his popularity suffered greatly following the notorious Chappaquiddick incident.
On the night of July 18, 1969, Kennedy was at Chappaquiddick Island on the eastern end of Martha's Vineyard in Massachusetts. He was hosting a party for a group of young women known as the "Boiler Room Girls", a group that had worked on his brother Robert's 1968 presidential campaign. Kennedy left the party with one of the women, 28-year-old Mary Jo Kopechne. He was driving a 1967 Oldsmobile Delmont 88, and he was believed to have been drinking. As he attempted to cross the Dike Bridge, which did not have a guardrail at that time. Kennedy lost control of his vehicle and crashed in the Poucha Pond inlet, a tidal channel on Chappaquiddick Island. Kennedy escaped from the overturned vehicle. He later said that he dove below the surface seven or eight times in an attempt to rescue Kopechne. He ultimately swam to shore and left the scene. Kopechne was trapped inside the vehicle. What was very troubling was that Kennedy did not report the accident to authorities until the next morning. By this time, Kopechne's body had already been discovered. Kennedy's cousin Joe Gargan later said that both he and Kennedy's friend Paul Markham had urged Kennedy to report it at the time, but Kennedy refused to do so until the next morning.
A week after the incident, Kennedy pleaded guilty to leaving the scene of an accident. He was given a suspended sentence of two months in jail. That night, he gave a national broadcast in which he said, "I regard as indefensible the fact that I did not report the accident to the police immediately". He denied driving under the influence of alcohol and also denied that there was any immoral conduct between him and Kopechne. Kennedy asked the Massachusetts electorate whether he should stay in office or resign; after getting a favorable response in messages sent to him, Kennedy announced on July 30 that he would remain in the Senate and run for re-election the next year.
The Chappaquiddick incident prevented Kennedy from running for President in 1972 and 1976. Many believed that Chappaquiddick had destroyed any chances he had to win on a national level. Despite this, in the summer of 1979, Kennedy consulted with his extended family. That fall he allowed rumors to spread that he might challenge Carter for the nomination in 1980. Gallup polling showed him beating the president by a margin of over two to one.
Kennedy’s official announcement was scheduled for early November. His campaign got off to a terrible start. In a television interview with Roger Mudd of CBS a few days before the announcement, Kennedy gave an incoherent, rambling and repetitive answer to the question of why he was running. Polls which had showed him leading Carter by 58-25 in August now had him ahead 49-39. Carter presented an image of confidence. When told of the Kennedy challenge, Carter snapped to reporters: "I'll whip his ass." Labor unions had urged Kennedy to run, as did some Democratic party officials who feared that Carter's unpopularity could result in heavy losses in the 1980 congressional elections. (Below is a video of Kennedy's answer given to Roger Mudd).
Carter was still very unpopular, but he enjoyed a momentary uptake in his popularity. The Khomeini régime had supported the kidnapping of 52 American hostages by a group of Islamist students and militants at the U.S. embassy in Tehran. At first Carter’s approval ratings jumped in the 60-percent range in some polls, due to a "rally ‘round the flag" effect. Americans seemed to initially appreciate Carter's calm handling of the crisis. The Soviet invasion of Afghanistan began on December 27. It also prompted Americans to get behind their president and allowed Carter to remain at the White House and appear presidential, while keeping Kennedy's campaign out of the headlines
Kennedy suddenly fell behind the President in popularity. Carter beat Kennedy decisively in the Iowa Caucuses on January 21, 1980, by a lopsided margin of 59.16% to 31.23%. Kennedy was hoping to rebound in New Hampshire. It was a New England State and Kennedy was a New Englander. Kennedy's fundraising efforts took a hit after Iowa and his campaign had to downsize. He remained defiant, saying "We'll see who is going to whip whose what."
But Kennedy never found the momentum he had hoped for in New Hampshire. After Iowa he lost the Maine Caucuses to Carter on February 10 by a narrow margin of 43.6% to 40.2%. In New Hampshire on February 26, the defeat was worse. Even though Carter did little campaigning in the state, the President still defeated Kennedy by nearly 10% (47.08% to 37.30%). On March 4, Carter won the primaries in neighboring Vermont by nealy a three to one margin (73.08% to 25.53%). The same day, Kennedy won his home state of Massachusetts as expected, for his first primary or caucus victory.
The race began to change later, as impatience began to build with the President’s strategy on Iran. Kennedy scored primary victories in New York and Connecticut. His campaign gained even more momentum after Carter's attempt to rescue the hostages on April 25 ended in disaster. Kennedy used the incident to cast more doubt on Carter's leadership ability. But even after Kennedy won the key states of California and New Jersey in June, Carter still managed to hold a significant lead in delegates, winning 28 state primaries, compared to 15 for Kennedy. Despite this, Kennedy refused to drop out, and the 1980 Democratic National Convention was one of the nastiest on record.
On the second last day of the convention, Kennedy conceded the nomination. In a memorable speech, he called for a more liberal party platform. Many Democrats considered this to be the best speech of his career. On the stage on the final day, Kennedy for the most part ignored Carter. He shook the president's hand only after it was physically directed towards Carter by house speaker Tip O'Neill, also from Massachusetts.
Kennedy is the last person to defeat an incumbent president in a statewide primary for that President's own party.