I think he’s talking about how statists tend to play on peoples’ fears (including LEGITIMATE fears) to grab more power for themselves. And whatever you think of Paul, he’s right about that. Just look at how the liberal Democrats use the specters of global warming, racism, old people and sick people being thrown into the street, etc.
This is a conversation I have with liberal friends all the time who talk about how Bush's war on terrorism is just fear mongering. The root of fear is the inability to deal with the problem or situation. In the case of what we are doing, we are not playing the fear card, just the opposite, instead of being afraid, we are fighting. The ones who are really playing on fear are the ones creating a bogeyman out of President Bush and other PTBs as having some sinister conspiracy. Those are playing on people's fears of a situation that is out of their control, but affects them.