Lib: yes, society was arguably more innocent and "moral" (read: traditional) back in the good old days, but that came at a price. Lessened freedom for many groups, such a women, minorities, them damn kids and so forth. Society was much less tolerant and more rigid, and though it may not seem that way in nostalgic memories, a lot of people were a lot less happy than they are today.
The government is not to blame for what you percieve as the moral degredation of America (and I admit you do have somewhat of a point). The government does not set the agenda on societal issues, social institutions do.
I strongly suggest you watch the recently released Angels in America, its deals with some issues which I think you
wll find fascinating. Trust me on this one, but be warned, its like 5-6 hours long.