As part of my background reading for my studies on whips - I've been looking at the Watergate and post-Watergate Congresses. At its centre is the November 5th 1974 landslide for the Democrats - which brought in the freshman class known as the "Watergate Babies". In the aftermath of the Watergate hearings; the resignation of President Nixon and President Ford's pardoning of his disgraced predecessor, Democrats gained 49 House and 4 Senate seats. How significant was the scandal in producing this result?
The conventional wisdom is that "voters treated [the Midterm election] as a referendum on Watergate and the economy."
Jacobson and Kernell however have contended that "the strategic decisions of candidates and contributors, guided by expectations about how Watergate and the economy would affect electoral odds, had an important effect on 1974 election results quite independent of voters' direct reactions to national issues" - in other words, expectations of a public reaction brought forward better candidates and more funding to take advantage of a likely swing to the Democrats. The anticipation of a win, caused the win!
There is an interesting debate on the issue in "American Political Science Review" Vol 80 No 2 (June 1986) - which is available via JSTOR (access from most academic institutions) - 'Interpreting the 1974 Congressional Election'. Another interesting article on voter attitudes at the time can be found in 'Watergate and the 1974 Congressional Elections' (McLeod, Brown & Becker) POQ 41 (1977) pp181-195.