Ron Paul's economic views, long dismissed by the political establishment, seem to be resonating more broadly. | REUTERS Ron Paul gains mainstream steam

Is libertarian rock star and Texas Republican Ron Paul going mainstream?

He’s got everyone from South Carolina Republican Sen. Jim DeMint to Minnesota moderate Democrat Collin Peterson to California liberal Barbara Boxer on his side in his audit-the-Fed crusade. He’s drawing liberal support in his push to rein in the cost of the war in Afghanistan. Senate candidates like Democratic Rep. Paul Hodes of New Hampshire are finding Dr. No’s populist economic anger to be useful in the campaign, echoing Paul’s criticism of the Federal Reserve.


Even Financial Services Committee Chairman Barney Frank (D-Mass.) is delivering backhanded compliments, taking credit for merely allowing a vote on Paul’s amendment to audit the central bank.

This convergence of odd bedfellows, and the economic angst that’s driving it all, is yet another signal that President Barack Obama is going to have more and more trouble keeping his traditional Democratic allies on his side as the economic debate continues. It seems that everyone is looking for something new to latch on to in the economic debate — even if those ideas belong to one of the more eccentric members of Congress.

“This brought people together [from] the whole political spectrum, from progressives and liberals and libertarians and conservatives. ... they all came together. That, to me, is what is really so important,” said Paul, who has been introducing his audit-the-Fed measure since the early ’80s.

After so many tries, this time Paul’s measure attracted 313 co-sponsors in the House, representing every possible point on the political spectrum. It also scored a strong vote in a key committee and has a companion in the Senate that’s supported by a bipartisan coalition of senators.

And Paul’s economic views, long dismissed by the political establishment, seem to be resonating more broadly than just the audit-the-Fed measure, both in the larger financial reform debate and the growing concern about the cost of continuing the war in Afghanistan.

To be sure, Paul’s bill to abolish the personal income tax or to end the United States’ membership in the United Nations still puts him well outside the mainstream.

But lawmakers — and, more important, the voters they represent — are starting to believe that the financial meltdown and the dramatic government rescue effort seems to have gotten Wall Street back on its feet quite nicely while leaving regular folks on the curb, analysts say.

“On financial regulation matters, most Americans sympathize with Ron Paul’s outrage,” said Cook Political Report House analyst Dave Wasserman.

Take Rep. Alan Grayson (D-Fla.), a firebrand liberal who infamously declared that the Republican health plan is for people to die instead of to use the health system. Despite being on opposite sides of the political universe from Paul on a wide range of issues, Grayson paired up with Paul to help push the amendment version of the Fed audit bill in the House Financial Services Committee.

The committee victory for the Paul-Grayson amendment came at the defeat of a weaker alternative offered by Rep. Mel Watt (D-N.C.) and backed by Frank. In normal times, the Watt amendment was just the kind of chairman-backed compromise Democrats would usually dutifully embrace. Instead the committee, including more than a dozen Democrats, opted 43-26 for the more intrusive Paul-Grayson measure.

“So far, the Federal Reserve has refused to answer questions about special loans and deals for Wall Street banks. I support an audit of the Federal Reserve to provide answers for working families and to protect New Hampshire taxpayer dollars,” said Hodes, a Democrat who is running for Senate in New Hampshire and backed the Fed measure.

Even Frank, who voted against the amendment, went out of his way during committee debate to associate himself with Paul’s effort. And a YouTube video of Frank’s remarks was quickly posted by a top pro-Paul website.

“I do want to claim credit as chairman of the committee for being the first one in 26 years who gave the gentleman from Texas the chance to [offer] this legislation,” said Frank, an expert at reading the political winds.

“I have never been a Fed worshiper,” Frank continued, before explaining his concerns that the amendment in its present form would raise inflationary expectations.

But Paul isn’t stopping with the auditing measure. He sees the other financial reform proposals throughout Congress as adding, not subtracting, from the vast Fed powers. And he has allies in the heart of the Democratic Caucus.

Democrats like Peterson and Maryland Rep. Elijah Cummings, along with liberals such as Ohio Reps. Dennis Kucinich and Marcy Kaptur echo concerns shared by Paul that the Fed gains too much power under the financial reform legislation authored by Frank and the Obama administration. Under Frank’s bill on systemic risk, the Fed would be the primary agent of a new council to regulate big, complex “too big to fail” financial firms, a position that would expand the central bank’s current oversight powers.

“Why are we even thinking about giving more power and authority to the Fed?” Peterson, a rural Democrat, asked during a hearing. “It is one of the more unaccountable parts of federal government. Its governance is influenced more on the wishes of major banks and the American people.”

And Sen. Chris Dodd, a liberal Democrat from Connecticut, surely wouldn’t credit Paul, but his sweeping financial reform draft legislation proposes stripping the Fed from bank oversight powers that the central bank has held since its creation.

Paul’s long-standing critique of American foreign policy has also earned him some new allies. Paul joined Reps. Walter Jones (R-N.C.), Jim McGovern (D-Mass.) and Steve Kagen (D-Wis.) on Nov. 18 in a series of House floor speeches to argue against committing more resources to Afghanistan and Pakistan.

The members of this bipartisan team were all signatories of a Sept. 25 letter to Obama that carried 53 other Republican and Democratic names opposing sending more troops to Afghanistan.

“I don’t think we can win the argument,” Paul recalled telling his three co-speakers as they planned the debate. “But eventually we’ll win — not because they’re going to listen to us and have another foreign policy. But we’re going to win because we don’t have any money, we’re broke and the troops will come home.”

“All empires end through a flawed foreign policy,” Paul said at another point in his interview with POLITICO.

For Paul and his vibrant grass-roots supporters, the next item on the legislative agenda is to continue pushing the Fed audit measure all the way to the president’s desk. Campaign for Liberty, a coalition of pro-Paul activists that grew out of the Texas Republican’s 2008 presidential campaign, has dropped hundreds of thousands of petitions on both sides of Capitol Hill in support of the measure. They and other online groups have been drumming up phone calls to congressional offices as well.

“The Senate’s not as close to the people as the House is, so it’s a little harder,” Paul said. “It will take some work over there; there’s no doubt about it. Believe me, the defenders of the Fed are still around, and we’ll still hear a lot from them.”