Narrator: In August 1980, President Carter survived the challenge from Senator Edward Kennedy for the Democratic nomination. The campaign had been bitter and divisive, but in the end, Kennedy had seemed too liberal and too tainted by scandal.

STUART EIZENSTAT: The attack from the left was extremely debilitating and the fact that we had a divided party going into the general election in 1980 against Ronald Reagan was an additional albatross beyond the hostage crisis and beyond inflation.

Reagan: Jimmy Carter's administration tells us that the descendants of those who sacrificed to start again in this land of freedom may have to abandon the dream that drew their ancestors to a new life in a new land.

Narrator: Republican candidate Ronald Reagan launched his campaign on Labor Day with a broadside attack delivered before an audience of working class Americans.

Reagan : The Carter record is a litany of despair, of broken promises, of sacred trusts abandoned and forgotten.

ROGER WILKINS: Reagan was the very formidable fellow. The combination of his beliefs, which were not numerous, but they were clear, and his acting skills really made people sit up and say, "This is, this guy means and believes what he's saying."

Narrator: Carter trailed Reagan by more than twenty points. With the Soviets in Afghanistan, the hostages in Iran, and the economy in shambles, he was vulnerable.

BERT LANCE: We were still going through tough economic circumstances. People were hurting. Interest rates were higher, unemployment was higher, inflation was greater.

Ad: When you come right down to it, what kind of a person should occupy the Oval Office? Should it be a person who like Ronald Reagan has proposed. . .

Narrator: Unable to run on his record, Carter went on the attack portraying Reagan as trigger-happy cowboy with his finger on the nuclear button.

Ad: "Occupation forces" to Rhodesia, and a destroyer to Ecuador to deal with a fishing controversy?

PAT CADDELL: We didn't have any cards to play because there wasn't any card to play. We were now trapped by events, trapped by a government that couldn't come up with any ideas, and, and basically we were frustrating the hell out of people. But, they still trusted Jimmy Carter not to blow the world up. And that was our only hope.

Narrator: On October 28, 100 million viewers, the largest audience ever to watch a presidential debate, tuned in. The candidates were running neck and neck.

Carter: ... very high medical bill then the insurance would help pay for it. These are the kind of elements of a national health insurance important to the American people. Governor Reagan again typically is against such a proposal.

Moderator: Governor.

Reagan : There you go again. When I opposed Medicare...

PAT CADDELL: He had won it in the first half-hour, by not being crazy. What had happened was you could see the shift in the beginning of the debate, over 90 minutes was a sense of he's not dangerous. That's all he had to do.

Dan Rather: Today, as the vigil of the hostages lengthens to one whole year ...

Narrator : The Monday before Election Day played like a nightmare for Jimmy Carter.

News Voices

JODY POWELL: A good portion of that weekend leading up to it and all day Monday, Americans were literally having their nose rubbed in this embarrassing, irritating, humiliating situation.

Narrator : Carter campaigned all day and into the night -- in Mississippi, Oregon, Washington. He arrived in Seattle at 3am -- the last rally, the last speech.

JODY POWELL: I had stayed on the plane, to finish up something. Before I could get off the phone rang. And it was Hamilton Jordan and Pat Caddell back in Washington. They had seen the tracking polls from that day, and they said, "It's basically over."

Carter: The people must decide this election. For your sake and for the sake of your children vote, vote for yourselves, tomorrow vote for yourselves, vote Democratic, help us, God be with you.

JODY POWELL: I went to hear his speech, thinking that I was the only person there who knew that basically the election was over and that we had lost.

Narrator: It was a landslide. Carter won only six states. For the first time in twenty-eight years the Democratic Party lost control of the Senate.

On the last day of his presidency Jimmy Carter stayed up through the night. A deal with Iran had been reached. The release of the hostages was imminent. A crew from ABC News stood by to record the historic moment.

WALTER MONDALE: He wanted to get these hostages home on his watch. And this was not about getting re-elected anymore. This was about getting this done because he felt so deeply about it. We were in the Oval Office around maybe two in the morning, and nothing happening. Dead silence.

But we got to the time where it was nine in the morning and we had to be at the inaugural. The new president was coming in at eleven. And finally we all started running off. And we still had one officer back there with a phone, the hotline, in case there was any news.

Reporter: Is there any word about the hostages? Have they taken off?

WALTER MONDALE: And he was in contact with Carter all the way up the inaugural route and on the platform. So if there was anything that was positive or negative he'd hear about it.

And of course the story was that Khomeini released them the minute after Reagan was president.