In 2007, Krugman published The Conscience of a Liberal, whose title references Barry Goldwater's Conscience of a Conservative. It details the history of wealth and income gaps in the United States in the 20th century. The book describes how the gap between rich and poor declined greatly in middle of the century, and then widened in the last two decades to levels higher even than in the 1920s. Most economists (including Krugman) had regarded the late-20th century divergence as resulting largely from changes in technology and trade. In Conscience, Krugman argues that government policies played a much greater role than commonly thought both in reducing inequality in the 1930s through 1970s and in increasing it in the 1980s through the present, and criticizes the Bush administration for implementing policies that Krugman believes widened the gap between the rich and poor.

Krugman also argued that Republicans owed their electoral successes to their ability to "exploit the race issue to win political dominance of the South". In this connection, he said that Ronald Reagan had been able to use the so-called "Southern Strategy" to "signal sympathy for racism without saying anything overtly racist," citing as an example Reagan's coining of the term "welfare queen".

In his book, Krugman proposed a "new New Deal", which included placing more emphasis on social and medical programs and less on national defense. Liberal journalist and author Michael Tomasky argued that in The Conscience of a Liberal Krugman is committed "to accurate history even when some fudging might be in order for the sake of political expediency." In a review for the New York Times, Pulitzer prize-winning historian David M. Kennedy stated, "Like the rants of Rush Limbaugh or the films of Michael Moore, Krugman’s shrill polemic may hearten the faithful, but it will do little to persuade the unconvinced".

In late 2008, Krugman published a substantial updating of an earlier work, entitled "The Return of Depression Economics and the Crisis of 2008". In the book, he discusses the failure of the United States regulatory system to keep pace with a financial system increasingly out-of-control, and the causes of and possible ways to contain the greatest financial crisis since the 1930s.

Economist J. Peter Neary has noted that Krugman "has written on a wide range of topics, always combining one of the best prose styles in the profession with an ability to construct elegant, insightful and useful models." Neary added that "no discussion of his work could fail to mention his transition from Academic Superstar to Public Intellectual. Through his extensive writings, including a regular column for the New York Times, monographs and textbooks at every level, and books on economics and current affairs for the general public ... he has probably done more than any other writer to explain economic principles to a wide audience." Krugman has been described as the most controversial economist in his generation and according to Michael Tomasky since 1992 he has moved "from being a center-left scholar to being a liberal polemicist." In 2010, The Economist described him as a left-leaning pundit.

From the mid-1990s onwards, Krugman wrote for Fortune (1997–99) and Slate (1996–99), and then for The Harvard Business Review, Foreign Policy, The Economist, Harper's, and Washington Monthly. In this period Krugman critiqued various positions commonly taken on economic issues from across the political spectrum, from protectionism and opposition to the World Trade Organization on the left to supply side economics on the right.

During the 1992 presidential campaign Krugman praised Bill Clinton's economic plan in the New York Times, and Clinton's campaign used some of Krugman's work on income inequality. At the time, it was considered likely that Clinton would offer him a position in the new administration, but allegedly Krugman's volatility and outspokenness caused Clinton to look elsewhere. Krugman later said that he was "temperamentally unsuited for that kind of role. You have to be very good at people skills, biting your tongue when people say silly things." In a Fresh Dialogues interview, Krugman added, "you have to be reasonably organized...I can move into a pristine office and within three days it will look like a grenade went off."