In retrospect, Ernie's pal, Eric is somewhat degenerate (7)
I believe the answer is:
relapse
'degenerate' is the definition.
(to relapse is to degenerate or regress)
'in retrospect ernie's pal eric is somewhat' is the wordplay.
'in retrospect' is a reversal indicator.
'is somewhat' indicates the answer is hidden within the clue.
'espaler' is hidden within 'ernies pal eric'.
'espaler' backwards is 'RELAPSE'.
(Other definitions for relapse that I've seen before include "Become sick again" , "fall into sin" , "Medical setback" , "Become ill again" , "Deterioration in health" .)