In his annual budget message, President Lyndon B. Johnson asks for $26.3 billion to continue the war in Vietnam, and announces an increase in taxes. The war was becoming very expensive, both in terms of lives and national treasure. Johnson had been given a glowing report on progress in the war from Gen. William Westmoreland, senior U.S. commander in South Vietnam. Westmoreland stated in a speech before the National Press Club that, "We have reached an important point when the end begins to come into view. I am absolutely certain that, whereas in 1965 the enemy was winning, today he is certainly losing. The enemy's hopes are bankrupt."
The day after Johnson's budget speech, the communists launched a massive attack across the length and breadth of South Vietnam. This action, the Tet Offensive, proved to be a critical turning point for the United States in Vietnam. In the end, the offensive resulted in a crushing military defeat for the Viet Cong and the North Vietnamese, but the size and scope of the communist attacks caught the American and South Vietnamese allies by surprise. The heavy U.S. and South Vietnamese casualties incurred during the offensive, coupled with the disillusionment over the administration's earlier overly optimistic reports of progress in the war, accelerated the growing disenchantment with the president's conduct of the war. Johnson, frustrated with his inability to reach a solution in Vietnam, announced on March 31, 1968, that he would neither seek nor accept the nomination of his party for re-election.