Two big things are happening in Washington today that will affect the outlook for inflation in 2023 and beyond. The first is the Federal Reserve policy meeting that we've covered here extensively.

• The other, just two miles down Constitution Avenue, is Congressional wrangling over year-end legislation that will affect how much Medicare pays doctors next year.

Why it matters: We talk a lot about how the Fed's policies impact inflation. Fiscal policy can also have powerful effects, yet debates over taxes and spending don't take place on those terms.

• If you believe high inflation is a national crisis, you might expect a whole-of-government effort to bring it down. Instead, the Fed has, for practical purposes, been the only entity in Washington acting that way.

The details: Congress is weighing changes to health care spending that could affect the prices patients pay.

• Congress may extend a COVID-era policy that boosts Medicare payments to doctors by 3%.
• It may also roll back a scheduled 4.5% cut in physicians' fees approved this year, implemented by the agency that oversees Medicare.
• There are macroeconomic implications to these decisions that shouldn't be neglected, an unlikely group argued recently.

What they're saying: "Policymakers concerned about combatting inflation or supporting a strong economy should implement fiscal policies that help reduce inflation, including in Medicare," said Marc Goldwein, Arnab Datta and Brian Blase, in a letter to congressional leaders.

• Goldwein is with the Committee for a Responsible Federal Budget (CRFB), an association of fiscal hawks. Datta is with Employ America, a group focused on macroeconomic policy that benefits the working class. Blase is with the Paragon Health Institute, a research shop.
• "Our three groups have different perspectives on numerous issues, but we all share concerns about rising health care costs, high inflation, and the risk of relying solely on the Federal Reserve to fight inflation," the letter says.

By the numbers: CRFB estimates that the health spending proposals in play, if implemented, would raise overall inflation by between 0.2 and 0.5 percentage points.

• "Slowing healthcare services inflation today will reduce the cost of medical care, but will also forestall the Fed from pursuing aggressive interest rate policies that risk a recession." Datta argues separately.

The other side: Health industry groups argue that the financial support for doctors and hospitals is important to ensure patients can obtain health care.

• "We cannot overstate the importance of Congress stopping the entirety of the upcoming 4.5% reduction" in physicians' fees, dozens of industry trade groups wrote in a recent letter.
• "Anything less will result in an across-the-board cut that will further exacerbate the significant financial hardship clinicians are already facing and undermine Medicare’s ability to deliver on its promises."

The bottom line: Sometimes microeconomic policy is macroeconomic policy.

Last week, we wrote about two opposing signals from the surveys that comprise the monthly jobs report: one showed a booming labor market, while the other suggested hiring has fizzled out.

• New estimates by the Philadelphia Fed — which used more comprehensive employment data released on a quarterly basis to augment those monthly estimates — suggests the latter narrative is winning out.

Details: Researchers found that just 10,500 net new jobs were created from March through June — not the whopping 1.1 million estimated by the Labor Department's monthly surveys of employers during that period. That's a huge disconnect.

The intrigue: Those estimates would be more consistent with the message from the household survey. It also helps explain the weak GDP numbers from earlier this year.

• But even so, there's still a head-scratcher: Those findings contradict most other jobs-related data that suggests the labor market has stayed tight.
• Weekly jobless claims indicate filings for unemployment insurance are still low. High job openings suggest voracious demand on the part of employers, and elevated levels of quitting show workers are bullish enough about the job market to leave their job. Wage growth is still strong.

The bottom line: This is a big economic mystery that's yet to be solved.