Hayakawa was elected in California to the United States Senate as a Republican in 1976, defeating incumbent Democrat John V. Tunney. Hayakawa served from January 3, 1977, to January 3, 1983. During a 1978 Senate debate over a pair of treaties to transfer possession of the Panama Canal and Canal Zone from the United States to Panama, Hayakawa said, "We should keep the Panama Canal. After all, we stole it fair and square." He did not run for reelection in 1982 and was succeeded by Republican Pete Wilson.
Hayakawa founded the political lobbying organization U.S. English, which is dedicated to making the English language the official language of the United States. As a former U.S. senator in the late 1980s, he opposed the Civil Liberties Act of 1988, which provided for apologies and monetary reparations to persons of Japanese ancestry who were interned by the federal government during World War II.
Hayakawa was a resident of Mill Valley, California, until his death in nearby Greenbrae, in 1992. He was also a member of the Bohemian Club. He had an abiding interest in traditional jazz and wrote extensively on that subject, including several erudite sets of album liner notes. Sometimes in his lectures on semantics, he was joined by the respected traditional jazz pianist, Don Ewell, whom Hayakawa employed to demonstrate various points in which he analyzed semantic and musical principles.
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