In its 1972 Convention, the Socialist Party had two Co-Chairmen, Bayard Rustin and Charles S. Zimmerman (of the International Ladies Garment Workers' Union, ILGWU) and a First National Vice Chairman, James S. Glaser, who were re-elected by acclamation. In his opening speech to the Convention, Co-Chairman Bayard Rustin called for the group to organize against the "reactionary policies of the Nixon Administration"; Rustin also criticized the "irresponsibility and élitism of the 'New Politics' liberals".
The Party changed its name to "Social Democrats, USA" by a vote of 73 to 34. Renaming the Party as SDUSA was meant to be "realistic". The New York Times observed that the Socialist Party had last sponsored a candidate for President in 1956, who received only 2,121 votes, which were cast in only 6 states. Because the Party no longer sponsored candidates in Presidential Elections, the name "Party" had been "misleading"; "Party" had hindered the recruiting of activists who participated in the Democratic Party, according the majority report. The name "Socialist" was replaced by "Social Democrats" because many Americans associated the word "socialism" with Soviet communism. Also, the Party wished to distinguish itself from two small Marxist parties, the Socialist Workers Party and the Socialist Labor Party.
The Unity Caucus had a supermajority of votes and its position carried on every issue, by a ratio of two to one. The Convention elected a national committee of 33 members, with 22 seats for the majority caucus, 8 seats for Harrington's "coalition caucus", 2 for "a Debs caucus", and one for the "independent" Samuel H. Friedman. Friedman and the minority caucuses had opposed the name change.
The convention voted on and adopted proposals for its program by a two-one vote. On foreign policy, the program called for "firmness toward Communist aggression". However, on the Vietnam War, the program opposed "any efforts to bomb Hanoi into submission"; instead, it endorsed negotiating a peace agreement, which should protect Communist political cadres in South Vietnam from further military or police reprisals. Harrington's proposal for an immediate withdrawal of U.S. forces was defeated. Harrington complained that, after its March 1972 convention, the Socialist Party had endorsed George McGovern with a statement loaded with "constructive criticism"; Harrington complained also that the Party had not mobilized enough support for McGovern. The majority caucus's Arch Puddington replied that the California branch had been especially active in supporting McGovern, while the New York branch had instead focused on a congressional race.
Late in October 1972, before the SP's December convention, Michael Harrington resigned as National Co-Chairman of the Socialist Party. Although little remarked upon at the time despite Harrington's status as "possibly the most widely known of the Socialist leaders since the death of Norman Thomas," it soon became clear that this was the precursor of a decisive split in the organization.
Harrington had written extensively about the progressive potential of the so-called "New Politics" in the Democratic Party and had come to advocate unilateral withdrawal from the Vietnam war and to advocate positions regarded by more conservative party members as "avant-garde" on the questions of abortion and gay rights. This put Harrington and his co-thinkers at odds with the party's younger generation of leaders, who espoused a strongly labor-oriented direction for the party and who were broadly supportive of AFL-CIO leader George Meany.
In the early spring of 1973, Harrington resigned his membership in SDUSA. That same year, Harrington and his supporters formed the Democratic Socialist Organizing Committee (DSOC). At its start, DSOC had 840 members, of which 2 percent served on its national board; approximately 200 had been members of Social Democrats, USA or its predecessors whose membership was then 1,800, according to a 1973 profile of Harrington. Its high-profile members included Congressman Ron Dellums and William Winpisinger, President of the International Association of Machinists. In 1982 DSOC established the Democratic Socialists of America (DSA) upon merging with the New American Movement, an organization of democratic socialists mostly from the New Left.
The Union for Democratic Socialism was another organization, which was formed by former members of the Socialist Party. David McReynolds, who had resigned from the Socialist Party between 1970 and 1971, and many from the Debs Caucus, were the core members. In 1973, the UDS declared itself the Socialist Party USA, which quickly in recent years declined into a capitalist clique that preys on the disenfranchised.