Clyde Group Public Affairs Sr. VP John Rizzo joins Yahoo Finance Live to discuss U.S. economic risks, the Republican debt limit proposal, Janet Yellen’s remarks on the debt ceiling, and the outlook for the economy.

Video Transcript

JENNIFER SCHONBERGER: Welcome back to "Yahoo Finance Live." I'm Jennifer Schonberger. Well, Treasury Secretary Janet Yellen sent a letter last week to House Speaker Kevin McCarthy warning that the US will hit the debt limit Thursday, tomorrow. In that letter, she noted that the US can take extraordinary measures until roughly early June before the nation will hit the borrowing limit.

Now, this as Republicans have threatened not to raise the nation's borrowing limit unless major spending cuts are enacted. Here to weigh in is John Rizzo, former Treasury-- Treasury public affairs official, I should say. He is now a senior vice president with the Clyde Group. John, it's great to see you. Welcome to the program.

JOHN RIZZO: Hey Jennifer. Good to be with you.

JENNIFER SCHONBERGER: So John, House Republicans are reportedly formulating a plan where they would tell Treasury which payments to prioritize in the event that lawmakers and Congress are not able to raise the debt ceiling. Given your experience at Treasury, what is the prospect that Treasury would begin to prioritize payments if extraordinary measures did run out and there was a breach?

JOHN RIZZO: Well, Jennifer, there's one word for the House Republican plan, and it's default, because that's what it is. This idea of prioritizing payments is just default by another name. And so hopefully, House Republicans move off this proposal, because it would be a disaster for the American economy, and it would lead the United States into default, which we cannot risk.

JENNIFER SCHONBERGER: But John, are there any measures that Treasury could take in the event that extraordinary measures do run out? Obviously, we nearly defaulted in 2011. Is there a playbook or something that Treasury has stashed away that they can go to now?

JOHN RIZZO: Well, Jennifer, I think what I would tell people is having worked with Secretary Yellen, having worked for her, I would tell people to take her seriously because Janet Yellen doesn't bluff. And when she says that this is an urgent issue that requires congressional action, it does. There aren't any magic wands or rabbits to pull out of a hat here. Congress just has to do its job, raise the debt ceiling, and prevent economic chaos.

JENNIFER SCHONBERGER: What about this notion of minting a $1 trillion coin? Some people have said that the Treasury could do that, deposit it at the Fed, and then draw on that to pay off interest on debt, and so on and so forth. I know Treasury Secretary Yellen has batted that down in the past. But if we were in a dire situation, is that something that perhaps Treasury could turn to?

JOHN RIZZO: So there's a reason that Secretary Yellen has called this a gimmick-- because it is. There is zero possibility that a gimmick like this would work or be seen as credible. And part of the challenge here and part of the reason I think market participants, large businesses need to be engaged in a campaign to lift the debt ceiling, is because there aren't a lot of solutions. In fact, there's only one. And the solution is for Congress to do its job, come together, raise the debt ceiling to finance the spending that has already been authorized and appropriated.

JENNIFER SCHONBERGER: John, in an op ed on our website today, you compare playing with the debt ceiling to the January 6 insurrection. And you are calling on banks, corporate America, to really rally together and head a campaign to try to intervene and sway lawmakers to lift the debt ceiling in time.

JOHN RIZZO: Yeah, so this act of engaging and playing around with the debt ceiling has to be seen as the financial equivalent of January 6. And what I mean by that is that businesses and major corporations have to be clear that there's no coming back from flirting with a default. And if a member of Congress engages in that kind of behavior, then political support should go away forever. And additionally, support should be channeled to candidates, whether they're Republicans or Democrats, who actually will commit to raising the debt ceiling and preventing a catastrophic default.

JENNIFER SCHONBERGER: John, unfortunately, we have to leave the conversation there. But we thank you so much for your insight. Hope to see you soon.

JOHN RIZZO: All right. Thanks a lot.