Without the Watergate Babies, the 1974 elections are only a modest gain for Democrats in Congress. The Nixon presidency concludes with falling popularity amid the 1973-1975 recession, Agnew's resignation, and the fall of Saigon (probably around late 1976 when the US is busy with the presidential transition). Attempts at healthcare reform and basic income fail. However, Egyptian-Israeli peace is negotiated in mid-1974 (Nixon wants to cement his legacy, Ratz is still in Yizchak Rabin's coalition, and Kissinger isn't fully behind building ties with the Arab countries yet) and a SALT II treaty is ratified in 1976.
Without a sitting president or a retiring Vice President Ford to overcome in the primaries, Ronald Reagan defeats John Connally- Nixon's endorsement- and Nelson Rockefeller. Traumatized by 1972 and with the way things are going abroad, IMO, Democrats tack to the right. Henry Jackson jumps into the wide open Democrat primary and wins a close one against Reagan, who's weighed down just enough by Republican fatigue and factionalism.
Fmr. Governor Ronald Reagan (R-CA) / Senator Richard Schweiker (R-PA)
Senator Henry Jackson (D-WA) / Fmr. Governor Jimmy Carter (D-GA) ✓
The late '70s economy is still pretty sour and things probably still go south in Iran. I could see a President Jackson attempting some "managed transition" of the Shah from power or some other shenanigans without Executive Order 11905 in the way- itself a consequence of the Watergate-borne "Year of Intelligence"- but by that point it was probably too late to get a pro-US government going. George Bush, some Reagan protégé like Paul Laxalt, or maybe even Jack Kemp wins in a pretty familiar-looking 1980 election unless Jackson does something totally crazy like invade Iran, in which case all bets are off. There would definitely be a third-party candidate to Jackson's left though, maybe Jerry Brown.
Another interesting butterfly is that John Dean, John Ehrlichman, and H.R. Halderman probably become key strategists within the GOP, which slows the rise of OTL's stars like Rumsfeld and Cheney.
