Ron Paul’s message of fiscal restraint may fall flat in recession-weary Nevada

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Ron Paul is having an I-told-you-so moment.

Running for president four years ago, Paul spawned a movement of mostly young political outsiders with doomsday talk of deficit spending and manipulation of the monetary system leading to economic ruin.

Perhaps nowhere else in the country did the movement take off like it did in Nevada, where his passionate followers fueled a second-place finish in the caucuses and hijacked the state convention in an effort to send Paul delegates to the national convention.

Now, Paul is seeking to build his following into an electoral force large enough to win the nomination. And he believes the economic collapse ignited by the bursting of the housing bubble, which he predicted well before it occurred, has given his message a credibility it lacked in 2008.

“We are winning this intellectual fight,” he told the Las Vegas Sun in a recent interview. “Last time they didn’t know what I was talking about. Now they do.

“The regulated economy and the inflation economy has brought us to our knees. It’s brought the world to its knees.”

But while Paul is positioning himself as the oracle of the collapse, just being right about the consequences of a burst housing bubble isn’t necessarily enough to draw a bigger political following, especially when his prescription for fixing the situation is to simply let the crisis run its course until the market can restore balance — especially when unregulated risk-taking with easy money played a major role in the financial industry’s collapse.

In Nevada, once home to a contingent of voters hungry for Paul’s brand of fiery rhetoric, that hands-off approach appears particularly painful.

The economic recession has led to a 13 percent unemployment rate. More than 60 percent of Nevada homeowners owe more than their house is worth, and, for many of them, their house likely will never again be worth what they paid for it. In September, one in every 118 Nevada homeowners received a foreclosure notice.

Paul’s grin-and-bear it approach might be more likely to shrink his appeal than grow it.

“For 15 percent of Nevada voters, they’ll say that’s exactly what I need,” UNR political scientist Eric Herzik said. “They’ll say I didn’t make those mistakes. I’m tired of bailing out people who made bad decisions.

“But outside of his base, to say ‘Oh, I was right,’ I don’t know that gets you anything. Particularly when the answer to the question ‘What are you going to do about it?’ is ‘nothing.’ ”

Republican strategist Robert Uithoven echoed that point.

“I don’t think voters spend as much time looking back as they do looking forward,” he said. “Voters more look at whether somebody has credible plans to address the problems. Simply saying you were right about policies in the past doesn’t differentiate you from other candidates.”

Paul strenuously disagrees with that notion. He argues the pain of government intervention and spending is much more severe than allowing the market to correct itself.

“Deficits really do matter,” Paul said. “When people know it’s in their best interest they will accept this. People are coming around to this. Just that we are getting a lot more support now is an indication they are coming around to this.”

In fact, Paul’s prescription goes beyond adopting a passive hands-off approach. He wants to withdraw American troops from around the globe. He would eliminate five cabinet-level departments and put the federal budget on a starvation diet — a diet he says will shrink even more rapidly as Americans realize the benefits of spending less.

And when it comes to monetary policy, he would eliminate the Federal Reserve and revert to the gold standard, in which all of the country’s currency would be backed by gold. That would prevent the government from printing enough money to fund its deficit spending on defense and “cradle-to-grave” social programs, according to Paul’s philosophy.

“The consequences are harsh by not doing it,” Paul said, countering the argument that a hands-off approach to the housing crisis in Nevada would be harsh.

Paul denied the pain of Nevada’s economic situation will be a drag on his campaign before acknowledging it’s a problem for him.

“I know we’re doing well out here,” he said. “It’s a very freedom-loving state, free-spirited.

“So if I could wave the wand and solve their housing problem a little faster, I would be a shoo-in.”