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    When obstacles become opportunities to work better

    Loyal readers will know my fascination with Keith Jarrett’s unplayable piano. In 1975, the jazz pianist was prevailed upon — against his better judgment — to take the stage in front of a large audience at the Cologne opera house. Thanks to a mix-up, Jarrett was forced to play on a beaten-up rehearsal piano. He nevertheless produced a magical performance and a live album that sold millions.It is a memorable example of the way that obstacles can produce a creative or productive response, and by no means the only one. After Django Reinhardt’s left hand was badly burnt in a fire, doctors said he would never play guitar again. Instead he became a jazz legend after he learnt to play in a distinctive style with two fingers. A teenage Doris Day switched from ballet to singing after a car accident shattered her leg.These are more than merely tales of triumph over adversity. In each case, it seems that the adversity was necessary for the triumph to occur at all. But what exactly is happening and are there lessons we might learn for a post-pandemic world?Let’s start with clarity about what is not happening. Day, with her shattered leg, did not try harder to dance; instead she trained as a singer. Jarrett and Reinhardt found different ways to play to overcome the limitations of Jarrett’s piano and Reinhardt’s wounded hand. The crisis blocks the old path and we explore until we find a new one.This process can happen almost instantly, as when Jarrett wrung extra volume out of an undersized piano, while avoiding the tinny upper registers, shaping a soothing yet energetic improvisation out of the middle and bass tones. Such a playing style was always available to him, but he hadn’t tried it.Similarly, we were always at liberty to go for a walk instead of a coffee with friends, or video-chat with distant family instead of sending an annual Christmas card. But it can take a jolt to awaken us to what has long been possible. Sometimes it takes longer to adjust. Day retrained; Reinhardt got a different guitar and developed a new style of playing. As an economist I am obliged by convention to call this “investment in new capital and skills”.The pandemic has induced plenty of that sort of investment. Home workers have boosted their broadband, installed webcams and taken delivery of more comfortable chairs. We have also picked up some basic skills; in video meetings we avoid sitting with windows behind us or with the camera pointing up our noses. Most of us now know how to switch off the filter that makes us look like a cat. When I interview people remotely for radio broadcast, they need to record themselves locally and use a file-transfer service to send over the large audio file. These requests used to bewilder many, but few now hesitate. We have learnt to cope.More subtle but perhaps more important is the shifting of social norms. I have just launched my latest book in Poland by giving TV interviews from my study in Oxford. Pre-pandemic, the alternatives would have been to fly to Warsaw (probably too much time and expense all round), to answer some questions over email or perhaps to talk to the London-based correspondent of a Polish newspaper. Now we all accept the remote TV interview: if the audience is underwhelmed by me, it will not be because they dislike the camerawork.

    A shock can prompt us to find new and better ways to live our lives, both individually and collectively. We try new ideas, develop new skills, invest in new kit and draw strength from the fact that others are doing likewise. Resilience is essential but is not enough: we need to be able to explore, experiment and adapt. In his new book, Recovery, Andrew Wear observes that major shocks have sometimes led to surges in productivity and to other forms of renewal, but that such happy stories are by no means guaranteed. After the first world war and a deadly pandemic, the UK economy stumbled in the 1920s, while the US economy surged. After the devastation of the second world war, Japan and Germany both experienced economic miracles.Wear argues that the basic difference is that the UK was scrambling to get back to Victorian-era glories, while the US, Germany and Japan — albeit in very different circumstances — were looking forward, not back. Even measures such as the postwar dismantling of German industrial plants seemed to help: it meant that West Germany was installing only the latest designs. There is a risk of glib generalisation here, and there is vastly more to say by Wear and many others, but the basic observation rings true. A crisis is not an opportunity unless we seize it, and that means being willing to learn and change. When the pandemic finally fades to a low grumble in the background, some people, organisations and governments will be building on what we’ve learnt. Others have been scrambling to get back to 2019 all along.Tim Harford’s “The Next Fifty Things That Made the Modern Economy” is now out in paperbackFollow @FTMag on Twitter to find out about our latest stories first. More

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    Vietnam warned strict lockdown forcing companies to move manufacturing

    Foreign investors in Vietnam have warned the government that its strict lockdown to control Covid-19 in the country’s south has forced some companies to move production to other markets. The message by four leading business chambers was delivered as one of the world’s toughest containment campaigns in and around Ho Chi Minh City has unsettled operations in one of Asia’s leading manufacturing hubs. “Businesses need a clear road map and date certain for reopening now,” the American, EU and South Korean chambers of commerce in Vietnam and the US-Asean Business Council said in a letter to Pham Minh Chinh, Vietnam’s prime minister.“Surveys that our associations have conducted show that at least 20 per cent of our manufacturing members already have shifted some production to another country, with more discussions under way,” the groups wrote in letter, which was sent last week.They said that many of their members were having “calls every night with regional and global headquarters deciding what customers to honour, which to turn away, and what production to shift”.After containing the pandemic’s first wave last year, Vietnam has suffered a record surge of infections blamed on the Delta variant. That has prompted a belated rush by the government to procure and administer vaccines. Authorities in greater Ho Chi Minh City, the centre of the outbreak, restricted most movement and imposed tight rules on factory work from early July, effectively forcing companies to choose between housing and feeding workers in “manufacturing bubbles” or shutting down. Some restrictions have been eased recently but the city remains largely under lockdown.

    Vietnam is one of Asia’s leading manufacturing hubs, with attractive tax and other policies luring foreign companies to establish operations © Nguyen Huy Kham/Reuters

    The curbs have particularly hurt operations in labour-intensive sectors. Companies whose suppliers or operations have been disrupted range from chipmaker Intel and carmaker Toyota to homeware retailer Ikea and sportswear brands Nike and Adidas. In addition to the bans on movement around Ho Chi Minh City, where the greater urban area sprawls into neighbouring provinces that have different rules, businesses have voiced frustration with restrictions on the entry to Vietnam of foreign professionals.“Policies intended to control the spread of the virus have caused significant operational challenges for businesses in Vietnam, especially with the frequent changes in regulations that are announced and implemented on very short notice,” Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi, told the Financial Times. “Economy-crippling restrictions are not sustainable, and after months of severe restrictions on activities and movement, I am pleased to see economic activity gradually resume here,” he added. The business backlash poses a challenge to Chinh’s government, which took power in April after a five-yearly shake-up of Vietnam’s ruling communist party. 

    Before the pandemic, Vietnam had one of Asia’s fastest growing economies, thanks to investor-friendly tax and other policies, and its network of free trade agreements. The country is a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and has a free trade deal with the EU. Vietnam, which before the pandemic was a leading destination for multinational companies looking to diversify operations away from China, was “missing out on investment opportunities that may not return”, the groups warned.“Investment will not increase without a clear plan for reopening and recovery,” they said. “Even existing businesses have most investment plans on hold, given current uncertainties.” Chinh has in recent weeks held online meetings with US, European, Japanese and other investors, some of which lasted several hours, at which they vented their frustrations and concerns. Follow John Reed on Twitter: @JohnReedwrites More

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    Taiwan blasts 'arch criminal' China for Pacific trade pact threats

    Chinese-claimed Taiwan said on Wednesday it had formally applied to join the Comprehensive and Progressive (NYSE:PGR) Agreement for Trans-Pacific Partnership (CPTPP), less than a week after China submitted its application.China’s Foreign Ministry said it opposed Taiwan “entering into any official treaty or organisation”, and on Thursday Taiwan said China sent 24 military aircraft into the island’s air defence zone, part of what Taipei says is an almost daily pattern of harassment.In a statement late on Thursday, Taiwan’s Foreign Ministry said China had “no right to speak” about Taiwan’s bid.”The Chinese government only wants to bully Taiwan in the international community, and is the arch criminal in increased hostility across the Taiwan Strait,” it said.China is not a member of the CPTPP and its trade system has been widely questioned globally for not meeting the high standards of the bloc, the ministry added.China sent its air force to menace Taiwan shortly after the application announcement, it said.”This pattern of behaviour could only come from China,” it said.In a statement also issued late Thursday, China’s Taiwan Affairs Office said China’s entry into the CPTPP would benefit the post-pandemic global economic recovery.China opposes Taiwan using trade to push its “international space” or engage in independence activities, it added.”We hope relevant countries appropriately handle Taiwan related matters and not give convenience or provide a platform for Taiwan independence activities,” it said.The original 12-member agreement, known as the Trans-Pacific Partnership (TPP), was seen as an important economic counterweight to China’s growing influence.But the TPP was thrown into limbo in early 2017 when then-U.S. President Donald Trump withdrew the United States.The grouping, which was renamed the CPTPP, links Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. More

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    Japan's Sept manufacturing activity growth slows – flash PMI

    The au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index (PMI) slipped to a seasonally adjusted 51.2 in September from a final 52.7 in the previous month, marking the slowest growth since January.Factory activity has faced headwinds from disruptions of parts supplies due to the rapid spread of the highly contagious Delta variant as well as a global semiconductor chip shortage.The September data showed Japanese manufacturers’ output shrank at the fastest pace in a year, while overall new orders contracted at the quickest speed in 10 months.The au Jibun Bank Flash Services PMI index remained in contraction, though it rose to a seasonally adjusted 47.4 from the previous month’s final of 42.9, which was its lowest since the depths of Japan’s COVID-19 slump of May 2020.The au Jibun Bank Flash Japan Composite PMI, which is calculated using both manufacturing and services, was in contraction for a fifth consecutive month, though it gained to 47.7 from August’s final of 45.5.”Flash PMI data indicated that activity at Japanese private sector businesses was scaled back further in September,” said Usamah Bhatti, economist at IHS Markit, which compiled the survey.”The pace of decline was softer than that seen in August, as the larger services sector saw a considerable easing in the rate of contraction.”Manufacturers’ input prices rose at the fastest pace since September 2008, the survey showed.”Input prices across the private sector rose at the fastest pace for 13 years, with businesses attributing the rise to higher raw material, freight and staff costs amid supply shortages,” Bhatti said. More

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    Japan CPI stopped falling for first time in 13 months, still below BOJ target

    TOKYO (Reuters) – Japan’s core consumer prices stopped falling for the first time in just over a year in August, government data showed, a source of solace for the central bank struggling to accelerate inflation towards its elusive 2% target.The Ministry of Internal Affairs and Communications data showed nationwide core consumer prices were flat in August compared with the same month a year earlier due to tug of war between rising energy costs and lower mobile phone fees.That matched a flat reading expected by economists in a Reuters poll, following a 0.2% decline seen in July.It was the first time since July 2020 that core CPI emerged from negative territory as weak consumption discouraged firms to pass on raw material costs to customers.The so-called core-core inflation index, which excludes food and energy prices and is similar to the core index used in the United States, fell 0.5% in August from a year earlier.Bank of Japan Governor Haruhiko Kuroda has maintained that excluding special factors such as mobile phone fees and a base year change in core CPI, which excludes fresh foods but includes oil prices, consumer prices have been in a positive territory.Kuroda has argued that the price trend remained firm and that inflation would gradually accelerate as output gap improves and inflation expectations rise, although inflation is unlikely to reach 2% through the end of Kuroda’s five-year term in 2023.That means the central bank will likely stick to massive monetary stimulus for the foreseeable future, despite concerns about side-effects of prolonged-low rates such as a hit to banks’ profits.Friday’s data suggested that a change in the base year for the CPI that gives a heavier weighting to mobile charge fees likely put a drag on core consumer inflation. Mobile phone fees plunged a record 44.8% in August.The BOJ stuck to its short-term interest rate target at -0.1% and that for 10-year bond yields around 0% at its two-day rate review that ended on Wednesday. More

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    UK consumer morale wilts under cost-of-living crisis: GfK

    The GfK Consumer Confidence Index fell to -13 in September from -8 in August, the lowest reading since April and the biggest monthly drop since October 2020, when a surge in COVID-19 cases led to renewed lockdown restrictions.A Reuters poll of economists had pointed to an unchanged reading. The readings come a day after the Bank of England said the case for higher interest rates “appeared to have strengthened” after it nudged up its forecast for inflation at the end of the year to over 4%, more than twice its target rate.Soaring wholesale European natural gas prices have sent shockwaves through energy, chemicals and steel producers, and strained supply chains for consumer goods which were already creaking under labour shortages and Brexit disruption.”All measures have declined this month and consumers are clearly worrying about their personal financial situation and the wider economic prospects for the year ahead,” said Joe Staton, client strategy director at GfK.He described the picture heading into 2022 as “really unwelcome”.Other surveys have also pointed to an unhappy mix of slowing economic growth and mounting cost pressures for both members of the public and businesses.Consumer prices rose last month by 3.2% in annual terms – the highest such rate in more than nine years. More

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    Tories fear voter backlash from rising cost of living

    Rishi Sunak, UK chancellor, is under growing Tory pressure to soften the impact of rising living costs this winter, with one senior MP drawing parallels with the pain suffered by households in the 1970s and 1980s.Sunak is feeling political heat on an almost daily basis, with families facing sharp rises in energy bills, higher food prices and — according to the Bank of England on Thursday — inflation heading above 4 per cent.The warning by BP on Thursday that it had “temporarily” closed some of its petrol stations because of a shortage of tanker drivers has heightened concerns among Tory MPs that the country is heading into a dark few months.For now Sunak is holding the line against calls for more financial support for families in next month’s Budget — arguing that rising wages and a buoyant jobs market are cushioning the impact of rising prices.He hopes that price surges and supply disruption will prove to be temporary, but Damian Green, former cabinet minister, said: “We are seeing quite a significant sea change in the economic challenges facing this country.“The cost of living was a huge concern back in the ‘70s and ‘80s,” he said. “But now the issue is back in the forefront.” Green said significantly higher prices were coming down the track.

    Ofgem, the energy regulator, is set to increase its price cap on bills by 12 per cent on October 1 and economists expect a further increase of 15-17.5 per cent next April. Some Tory MPs fear prime minister Boris Johnson is facing his own “winter of discontent”.While many of the global supply issues are beyond Sunak’s control, the opposition Labour party believes the chancellor’s decision to end a £20-a-week “temporary” uplift to the universal credit benefit will lead some families to blame him as household budgets tighten.Therese Coffey, work and pensions secretary, urged Sunak to soften the impact of next month’s universal credit cuts by adjusting taper rates to allow workers to keep more of any additional income, according to government officials.Sunak has so far resisted that argument — made by Coffey in her pre-Budget public spending bid — as well as pressure from Tory MPs to retain the universal credit uplift. Coffey has proposed cutting the taper — the rate at which universal credit is withdrawn for every extra pound earned — from 63p to 60p, in a leaked proposal first reported by the Daily Mirror. The move would cost up to £1bn. No final decisions have been taken but Sunak will be forced to confront the issue of rising costs in his October 27 Budget.Torsten Bell, director of the Resolution Foundation think-tank, said: “The danger for the government is that because of the universal credit cuts, they could “own” a cost of living crisis.”Conservative MPs have been receiving invitations for talks with Sunak to discuss the tight fiscal situation ahead of the Budget, with bacon sandwiches served in Number 11 for breakfast and “warm white wine” in the chancellor’s House of Commons office in the evening.Many MPs leave the meetings chastened by Sunak’s warning that any increase in spending — such as another £6bn-a-year extension to the UC uplift — would have to be covered by a rise of 1p on the basic rate of income tax and a 5p rise in fuel duty.After Sunak’s decision this month to increase national insurance rates to put an extra £12bn a year into health and social care — the rises take effect next April — many Tory MPs refuse to countenance even higher taxes.

    Sunak has also frozen personal income tax allowances from next April, meaning that people will see a further squeeze on their household budgets just as they emerge from what could be a tough winter.“For the last few years there have been no limits to spending, but that’s finished now,” said one Tory MP briefed by Sunak. He said MPs were worried about rising living costs but were “more nervous about tax rises”.Another MP said that, for now, the number of emails from constituents concerned about rising living costs was running at only 5 per cent of the level of people who had fulminated about the lockdown-busting trip to Barnard Castle by Johnson’s former chief aide Dominic Cummings — a benchmark used by MPs to measure public anger.Sunak tells MPs that with underlying wage growth of 4-5 per cent and a number of government-backed schemes to help people back into work — and to retrain — there is support through tough times.But Steve Baker, another former minister, said: “I’ve long believed that this winter we will see inflation coming in and staying in. Now we’ve got an energy crisis on top of it.” Like Green, he opposed the universal credit cut.“I’m sorry to say that rather abstract ideas about levelling up won’t mean much if the public see their bills rising, interest rates rising and the increasing cost of meeting net zero coming in,” he said.Conservative strategists are nervously monitoring public opinion as prices start to rise; Labour leader Sir Keir Starmer, who addresses his party conference next week, is expected to focus heavily on the cost of living crisis.Meanwhile UK consumer confidence fell back to minus 13 in September, down 5 points from August and the lowest level since April, according to the research company GfK. More

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    Treasury's Janet Yellen Is Being Tested by Debt Limit Fight

    The Treasury secretary must wade into a standoff between Democrats and Republicans over raising the debt limit.WASHINGTON — When Janet L. Yellen was Federal Reserve chair in 2014, she faced a grilling from Republicans about whether the federal government had a plan if the nation’s borrowing limit was breached and measures to keep paying the country’s bills were exhausted.Ms. Yellen, appearing at a congressional hearing, outlined a dire scenario in which financial institutions might try to make payments that they could not cover, because the Treasury Department was out of money, leading to a cascade of bounced checks. She pushed back against the notion held by some Republicans that an economic meltdown could be averted, warning that there was no secret contingency plan.“To the best of my knowledge, there is no written-down plan,” Ms. Yellen said at the time, adding that it was beyond her remit at the Fed. “That’s a matter that is entirely up to the Treasury.”Fending off such a calamity is now squarely the responsibility of Ms. Yellen, who is confronting the biggest test she has faced in her eight months as President Biden’s Treasury secretary. Mr. Biden chose Ms. Yellen to help steer the economy out of the pandemic downturn. But in the face of congressional dysfunction, she has been thrust into a political role, trying to convince reticent Republican lawmakers that their refusal to lift the debt cap — which limits the government’s ability to borrow money — could lead to a financial collapse.It is not a comfortable spot for Ms. Yellen, an economist by training who is now trying to navigate the rough political waters that she tends to avoid by countering legislative gamesmanship with economic logic.Over the past month, Ms. Yellen has reached out to Democrats and top Republican leaders, including Senator Mitch McConnell of Kentucky, the minority leader, and Representative Kevin Brady of Texas, the top Republican on the Ways and Means Committee. She has used those calls to convey the economic risks, warning that the Treasury’s ability to stave off default is limited and that failure to lift or suspend the debt cap by sometime next month would be “catastrophic.”Ms. Yellen has reminded Republicans in the calls that they have been willing to join Democrats in lifting the debt ceiling in the past, and that raising the cap allows the U.S. to pay its existing bills and does not authorize new spending.Thus far, Republicans seem unmoved by Ms. Yellen’s overtures.In a call with Ms. Yellen last week, Mr. Brady said he told the secretary that he would be happy to work with her on a bipartisan framework focused on financial stability and curbing government spending but, barring that, Democrats should not expect Republicans to help them address the debt limit.“They are playing a dangerous political game with our economy and it’s absolutely unnecessary,” Mr. Brady said on Wednesday.Mr. McConnell conveyed a similar message during a telephone conversation with Ms. Yellen last week, his spokesman said. Mr. McConnell’s former chief of staff, Brian McGuire, said the Kentucky Republican would not be persuaded by pressure tactics and suggested that the Treasury secretary should direct her economic warnings at Democrats.“If I were advising Secretary Yellen, I’d suggest she be highly skeptical of the Democratic strategy on the debt limit,” said Mr. McGuire, who was Treasury’s assistant secretary for legislative affairs from 2019 to 2020.On Thursday, Ms. Yellen appeared at a news conference with Speaker Nancy Pelosi of California and Senator Chuck Schumer of New York, the majority leader. Ms. Pelosi assailed Republicans for refusing to join Democrats in covering costs that both parties have incurred, including the $1.5 trillion tax cuts that Republicans passed during the Trump administration.“This is a credit-card bill that we owe,” Ms. Pelosi said.Democrats wanted to pair the federal debt limit increase with legislation to keep the government funded through early December, which would require Republican support in the Senate. With no such agreement in sight, the White House’s Office of Management and Budget on Thursday alerted federal agencies to review their shutdown plans, given funding is scheduled to lapse next week.Democrats do have another legislative option for raising the borrowing cap — they could pair it with the $3.5 trillion spending bill that they are aiming to pass along party lines using a fast-track process known as budget reconciliation. However, that would impose procedural hurdles they are trying to avoid, and Democrats have yet to agree on what the spending bill should include or how to pay for it. Party leaders claimed progress toward a deal on Thursday, saying they had agreed upon an array of possible ways to pay for it. But they offered no details about what programs would be included or what the total cost would eventually be, and what they called a “framework agreement” appeared to be modest.With the debt limit increase becoming so contentious, Ms. Pelosi signaled for the first time on Thursday that Democrats could ultimately strip it from the government funding bill because of Republican opposition.“We will keep our government open by Sept. 30, which is our date, and continue the conversation about the debt ceiling, but not for long,” she said.Ms. Yellen, who has kept a low public profile in the last month, did not make a statement at the news conference and took no questions.In private, she has tried to amp up the pressure. Ms. Yellen has personally warned the chief executives of the nation’s largest banks and financial institutions about the very real risk of default. Over the past several days she has spoken to Jamie Dimon of JPMorgan Chase, David M. Solomon of Goldman Sachs, Brian T. Moynihan of Bank of America and Laurence D. Fink of BlackRock, telling them about the disastrous impact a default would have, according to people familiar with the calls.The banking industry traditionally wields significant influence with Republicans; the biggest financial services lobbying groups wrote a letter to top lawmakers earlier this month urging them to take action.“Any default would negatively impact the general economy, disrupt the operations of our financial markets, undermine confidence, and raise funding costs in the future,” they wrote.Ms. Yellen has also sought the counsel of her predecessors, including Steven T. Mnuchin, Jacob J. Lew, Timothy F. Geithner and Henry M. Paulson. Mr. Paulson, who served under President George W. Bush and maintains strong ties with Republican lawmakers, has echoed Ms. Yellen’s concerns about the impact of a default in conversations with Mr. McConnell, according to a person familiar with the matter.Earlier this week, six former Treasury secretaries sent a letter to top lawmakers, warning that a default would blunt economic growth, roil financial markets and sap confidence in the United States.“Failing to address the debt limit, and allowing an unprecedented default, could cause serious economic and national security harm,” they wrote in the letter that was published by Ms. Yellen’s Treasury Department.Ms. Yellen’s task has been complicated by the fact that while she can readily convey the economic risks of default, the debt limit has become wrapped up in a larger partisan battle over Mr. Biden’s entire agenda, including the $3.5 trillion spending bill.Republicans, including Mr. McConnell, have insisted that if Democrats want to pass a big spending bill, then they should bear responsibility for raising the borrowing limit. Democrats call that position nonsense, noting that the debt limit needs to be raised because of spending that lawmakers, including Republicans, have already approved.“This seems to be some sort of high-stakes partisan poker on Capitol Hill, and that’s not what her background is,” said David Wessel, a senior economic fellow at the Brookings Institution who worked with Ms. Yellen at Brookings.While lawmakers squabble on Capitol Hill, Ms. Yellen’s team at Treasury has been trying to buy as much time as possible. After a two-year suspension of the statutory debt limit expired at the end of July, Ms. Yellen has been employing an array of fiscal accounting tools known as “extraordinary measures” to stave off a default.Uncertainty over the debt limit has yet to spook markets, but Ms. Yellen is receiving briefings multiple times a week by career staff on the state of the nation’s finances. They are keeping her informed about the use of extraordinary measures, such as suspending investments of the Exchange Stabilization Fund and suspending the issuing of new securities for the Civil Service Retirement and Disability Fund, and carefully reviewing Treasury’s cash balance. Because corporate tax receipts are coming in stronger than expected, the debt limit might not be breached until mid- to late October, Ms. Yellen has told lawmakers.A Treasury spokeswoman said that Ms. Yellen is not considering fallback plans such as prioritizing debt payments if Congress fails to act, explaining that the only way for the government to address the debt ceiling is for lawmakers to raise or suspend the limit. However, she has reviewed some of the ideas that were developed by Treasury during the debt limit standoff of 2011, when partisan brinkmanship brought the nation to the cusp of default.A new report from the Bipartisan Policy Center underscored the fact that if Congress fails to address the debt limit, Ms. Yellen will be left with no good options. If the true deadline is Oct. 15, for example, the Treasury Department would be approximately $265 billion short of paying all of its bills through mid-November. About 40 percent of the funds that are owed would go unpaid.“Realistically, on a day-to-day basis, fulfilling all payments for important and popular programs would quickly become impossible,” the report said, pointing to Social Security, Medicare, Medicaid, defense, and military active duty pay.Tony Fratto, a Treasury official during the Bush administration, lamented that Ms. Yellen is operating without any leverage. Democrats, he said, appeared to have miscalculated when they thought that Republicans would be too ashamed to block a debt limit vote after supporting a suspension of the borrowing cap when President Donald J. Trump was in office.“I think that was in the ‘hope’ category,” Mr. Fratto said. “This is Washington in 2021 — your hopes will be dashed.”Lananh Nguyen More