No one answered this? Well, the answer is yes, but, like most things, it is not that simple... What’s important to remember is that Watergate is not an isolated event, but an amalgamation of all of those things you mentioned, and some other things... Really, the decline of American idealism in politics probably began, in earnest, on November 22, 1963. The assassination of JFK is that watershed moment in history that you can’t shake free from no matter the topic, and it certainly has a direct role in Nixon’s presidency, and thus Watergate.

But, let’s focus on the events after 1968, leading to Watergate, and really, the event here is Vietnam. Simply put, from Vietnam, you get the Pentagon Papers. From the Pentagon Papers, you get the first (that we know of) blatantly illegal act by Nixon’s men; breaking into Daniel Ellsberg’s psychiatrist’s office. While this break-in goes unnoticed at the time, the two men who planned it are the same two men who planned the Watergate break-in. And, the men they hired to break-in to the psychiatrist’s office are the same men they hired to break into the Watergate. So, when the men are arrested inside the Watergate, the White House instantly goes into cover-up mode, by paying hush money, so as to not reveal this original break-in. This cover-up succeeds in getting Nixon re-elected, but ultimately comes undone, leading to Nixon’s resignation, as he was intimately involved. So, as you can see, the events as you mentioned are directly related.

Now, back to your main question, is this the decline of American faith in their government? Keep in mind it wasn’t the crime of a cover-up that did Nixon in, it was the going on TV multiple times to give public addresses from the Oval Office, saying he had no involvement in the Watergate break-in or any subsequent cover-up. So, when Nixon ultimately releases the tape of June 23, 1972, the so-called “smoking gun,” and it is revealed he was involved in the cover-up from virtually day one, it marks a sort of loss of innocence in American politics. In a Gallup poll done in 1997, they covered this specific topic. The results are as follows:

“A Gallup poll taken earlier this month updated several questions about public trust and confidence in government that were first asked prior to Watergate being widely reported. The results indicate that Watergate triggered a decided shift away from high public confidence in the government in Washington generally, but that it had much less effect on perceptions of specific aspects of government, such as the Executive branch, the Legislative branch, or even of "politicians" generally (defined as men and women serving in or running for public office).”

Further: “The greatest damage to the government's reputation as a result of Watergate appears to be in the amount of trust Americans say they have in Washington "to do what is right," a question asked consistently by the University of Michigan since 1958 for its National Election Study. In 1972, before Watergate became the scandal of the decade, more than half of American adults gave the government very high marks, saying they could trust it all or most of the time, while 45% opted for the "only some of the time" alternative. By 1974, high trust had dropped to 36% and has remained below 50% ever since.”

“...only 32% of Americans have a high level of trust in government to do what is right on this measure. Two thirds trust it "only some of the time."”

Clearly, Watergate had a sizable impact on the American people, though like I said, Watergate was the culmination of prior events, namely Vietnam, which lead to the first resignation of an American president. It is the combination of those things that lead to where we are today. I hope that answers your question.

Source: Gallup, Americans’ Faith In Government Shaken But Not Shattered By Watergate 1997

Watergate source: Watergate by Fred Emery 1994