I have a friend who is a traditionalist priest in the Fraternity of St. Peter, and he has told me that the decades leading up to Vatican II were actually the low point in recent church history. The problem, he says, is that Catholic moral teachings were so "strong" at the time that the church ceased to be the counter-cultural force it had always been and became very much "part of the culture" (imagine Archbishop Fulton Sheen not only on network television, but generating the highest ratings in the New York City market!).
The result of this "cultural strength" was that people in predominantly Catholic areas no longer had to make an exceptional effort to distinguish themselves in a secular world -- why would anyone need to, when Catholics in most cities identified themselves by their parish instead of their neighborhood?). This "Catholic strength" was soon translated into the secular realm in the form of labor unions, corrupting political power, etc., and it was only a matter of time (specifically the post-WWII era when Catholics "came of age" and became typical American suburbanites) before "lukewarm" became the defining characteristic of Catholicism in the U.S.
Sure, things are messy right now. But increasing numbers of Catholics are seizing upon marvelous opportunities to turn away from the silly, bland Modernism that dominates the parish scene these days and are getting serious about their faith. The numbers that Pat Buchanan quotes are meaningless -- Christ Himself said that the gate to eternal life is narrow, so the notion that there are 52 million "Catholics" in this country is irrelevant.
More so in Europe than in the US, where the church was not that strong, Catholicism had, especially for the clergy, degenerated into an excessively dogmatic and rule bound institution that was so caught up in arcana that it could no longer do the modern world justice. But at the same time, as an institution, it insisted on its prerogatives.
I think the problems began in Europe when the church obviously was delinquent in its pastoral obligations towards the poor, which resulted in the spread of socialism. The first half of the last century was spent watching the Pontiff who did so die, watching the Habsburgs self-destruct after his sheperding bore its fruits, and then watching national socialism in action. It wasn't until the 60s that things had calmed down enough for the necessary day of reckoning. 60 years worth of changes can't be pushed through in a decade, without a lot of dishes being broken.