Let's see (based on this; also see John Lott's take, and Phil Miller's posting):
- cut taxes and increase transfer payments to increase aggregate demand and reduce unemployment (to move the economy up and leftward along a given short-run Phillips curve). Both John Lott and Phil are skeptical about the efficacy of this policy.
- at the same time keep in place policies that encourage unemployed persons to search longer, thus shifting the long-run Phillips curve to the right.
This combination is same as the one we experienced in the late 1960s and early 1970s. If the policy trends continue, I'm guessing the US could very well be in for another bout of Stagflation in the next year or two.