I must admit I had a passing familiarity with the Ron Paul newsletter controversy prior to all this renewed fuss over it. It has, indeed, given me some reservations about him. Some qualifiers.
1) I do not think he is an avowed racist. I think it likely he is personally uncomfortable with homosexuals, but this too hasn't coloured his recent political stances. Which is to his credit. I am pretty sure he's not anti-Semitic too for the record. Given the history of Rothbard and Mises, it's extremely unlikely anyway. The reason this comes up is that anyone in politics who isn't "pro-Israel" to the hilt of anything goes is labeled as "anti-Semitic" by Christian Zionists. Ranting about bankers doesn't help much here, but I'm sure this is from his Austrian economics roots and not a bias against Jews. I wish he would give up some of the Austrian-Randian tendencies personally, but that's hardly his biggest problem in the Republican field. I also think his opposition to the Civil Rights Act (at least a portion of it) can be shown in a strict libertarian objection to be a principled rather than racist sentiment. It can be explained away in some sense because Paul often has adopted a perfect over the good sentiment in his voting. I look at CRA and say that it completely ended a lot of bad government policies and replaced them with a few much less bad government policies, rendered somewhat necessary by cultural and societal issues that are still strained, but improved somewhat. So I see a win. Paul doesn't. That makes it a fishy element for people looking for racist sentiments. He should be aware of the tone as a politician.
2) I am pretty sure Lew Rockwell wrote most of the offending materials. This was what was reported on back in 2008 at least.
3) I'm not sure if Lew is racist or not, and I really don't care if he is (I haven't read more of his material, nor do I care to. Rothbard and Mises are the go-to sources for that wing of the libertarian thought, and lack most of the distinguishing features that are disturbing here). In general I'd say that race-baiting is a time-honored tradition in some portions of the conservative (and yes, liberal) political circles for purposes of elections. A radical newsletter circulating even tenuously racist generalisations is likely to have been generating some additional income that wasn't likely to be the case without them, as sick as that is. I am not sure it would today, given that it would and has pissed off a solid number of Paul-ish types like me who would take their business elsewhere, but in the late 80s and early 90s, when hip-hop was in its infancy to the public and race riots were still at the forefront of American possibility (Rodney King wasn't so long ago keep in mind), maybe it would have. Whether or not these attitudes were thus true, they are repugnant and draw far too easy comparisons to Governor Wallace of Alabama during the Civil Rights Era itself, who traded NAACP support for KKK support in the pursuit of power. The also racy tie-in to Stormfront and other racist supporters of a Paul candidacy, however misguided they are in their perceptions of what a freer state under Paul might allow for themselves, hasn't come up yet, but I'd expect it to do so. Especially if he wins Iowa.
4) Paul's adamant stance against the drug war is probably one of the most un-racist things we could do in this country. In the sense that it would allow some restorative balance to the way we police and punish minority communities of blacks and Latinos (and immigrants) in this country. Also helpful would be not unilaterally bombing or engaging in wars in places with Arabs and Africans (without some core national interest, none of which was demonstrated in any location save possibly Afghanistan). A better Paul might have sought to demonstrate actively how a libertarian world might benefit people of a non-Caucasian appearance and disposition.
What seems to me to be the issue is that, while it is true that Paul addressed this history recently, during the 2008 campaign, he wasn't perceived as even a longshot to win a Presidential election or nomination and the amount of attention and scrutiny he received was modest and low. He is now a frontrunner or at least top tier candidate for a major political party. This issue will come up again and again until he deals with it assertively and decisively (and it will continue even then among his most fervent objectors) because a) this is politics and b) most people don't know very much about Ron Paul. Ron Paul's bubble of supporters certainly do, as evidenced from watching comment threads climb steadily and rapidly upward whenever this issue is raised is certainly interesting to note the level of internet fandom he has received. Political observers like me also know about it. But the average voter does not. And the average voter deserves to know what political opinions and behaviors a Ron Paul candidacy could or would involve, just as Herman Cain or Newt Gingrich's despicable anti-Muslim rants deserve to be properly aired, and in their cases serve as much keener examples of bias and prejudice coming from their own mouths, repeatedly and in the very recent past in pursuit of power and attention.
Now, of course, it would have been useful if a Ron Paul objector like Borger on CNN had also introduced some of Paul's more radical political positions he has espoused in the most recent and immediate past. Things like opposition to the Federal Reserve and actually abolishing numerous government bureaucracies (though I support the latter in some cases too, I admit this is a non-popular and radical position outside of GOP talking points, but not actual GOP behavior, and many economics departments), ending US participation in the UN and global trade organisations (radical and stupid, but popular), or even less radical or even mainstream (but ignored) positions like legalisation of marijuana or internet gambling or ending the wars in Iraq and Afghanistan and abolishing most war on terror footings and government invasions of privacy and property. Voters do deserve to know things about the temperament and disposition of their candidates. They also need to know potential stances.
I'm not sure that I would vote for a Ron Paul candidacy. I would definitely vote for a Gary Johnson candidacy because there are fewer of these skeletons for me to worry about and fewer crankish issues come up as often like Paul's goldbug fascination and polished anti-Fed stance. But I'm not every voter. Every potential voter should decide how to weigh Paul's past misdeeds and missteps in his choice of associates and political association, along with his potential for positive development. If they assess that they do not care for his politics, that is their choice (and in such a case, it doesn't matter what his skeletons are). If they assess that they might be pleased with his politics, but are uncomfortable with his skeletons, that also is their choice. And if they assess that they might enjoy his politics and decide that whatever discomfort they have of his skeletons, that the world is better off even with a possible racist who would end many more pressing considerations and injustices, including some which offer some balm to the fires of racism stirred up over human history, then that too is their choice. It would be the duty of a media to inform, as broadly and capably as possible, the facts of these cases. It certainly has not done so to date on a mainstream level. Reason and the New Republic certainly covered this particular issue 4 years ago. He has made frequent mostly genial appearances on the Daily Show (Stewart indeed plugs for him where the media has constantly overlooked and pointedly ignored him). Libertarians or libertarian leaners are generally quite full up on Ron Paul coverage from some outlet or another (Mises, Reason, Cato, Atlantic, etc). And there are plenty of Paul-related blogs, both pro and con, to consult. Particularly now after he has been in the national eye for several years running for President and campaigning actively with grassroots support. So it's not like he's been ignored entirely. But until today nothing in a major newspaper or TV news outlet has really scrutinized him and/or his ideas. That is an abject failure to consider the likelihood that the other "mainstream" Republican candidates, sans Mitt Romney, would sputter and flounder for their much more prominent instabilities and failings and that we would be left with Ron Paul and Mitt, and maybe Jon Huntsman if more Republicans were smarter than they currently are. And this was obvious months ago before Rick Perry or Herman Cain even entered the race and left it (wait, Perry is still out there? Oh right, my mistake...). The media could have vetted this months ago.
That said. It is also the duty of a candidate like Ron Paul to assuage, as capably as he can do so, concerns about his temperament and attitudes expressed and espoused with his name attached to them in the semi-recent past by an adult. He has so far failed to do so on a mainstream level. Obama had to come up with a defusing speech about his faith and his pastor because of far overblown concerns about his attachment to a radical church. Paul should have less incentive given the distance in time involved, but no less of a political duty to do the same to broadly explain to as many people as possible, what his views, sentiments, and influences are on the matter of race. It would not require a speech. A polished answer would suffice. Even an answer about free speech could be helpful.
A man in his 40s (Obama) or 50s (Paul when his newsletter circulated these repugnant opinions) is not someone who can be excused a youthful indiscretion in the manner of a masters thesis or a teenage experimentation. Particularly when that man seeks considerable power at our behest.
We must ask. And they must answer.