The United States trade deficit, which made the country the largest debtor nation in 1985, will cause a worldwide depression in the next five years, the chairman of GTE told a Business school audience yesterday.

Theodore F. Brophy said that continuation of the deficit will create "economic stagnation, lost jobs, and a decline in the standard of living for our children."

Speaking before an audience 35 in Aldrich Hall, Brophy said that the trade deficit will increase from last year's $150 billion to $1 trillion by 1990 and $2 trillion by 1995.

"America is no longer in a commanding position in international industry," said Brophy. "The Chinese offered to loft our satellites, and New York City turned to Canada to find grafitti-proof subway cars."

The 1949 graduate of the Law School placed partial blame for the deficit on the Marshall Plan. "We chose to help our enemies and allies to rebuild their economy [after World War II]. Europe and Japan ended up with industries more modern and more productive than their American counterparts," Brophy said.

"We have been victims of our own success," he said.

Brophy named several additional factors which contributed to the decline of American manufacturers.

"Industry has not looked to the world as a marketplace; the government has not formed effective policies against foreign tariffs, and labor has sought work rules and pay demands which priced us out of the world marketplace," he said.

"Our government has not taken trade issues seriously. Other foreign policies are more important," said Brophy.

He outlined a program to cure America's industrial ills. "Foreign trade must be a top policy of government. We must be impatient with the trade barriers of our foreign markets. We cannot have trading partners more interested in trading victories."

In addition, Brophy recommended that Americans take a greater interest in education and the productivity of the work force, while labor and management must attempt to reestablish the work ethic.