Saying President Obama has "shown no ability to lead," former General Electric chairman Jack Welch gave CNBC his own three-part prescription Thursday for improving the U.S. economy.

AP Jack Welch

Start with cutting 25 percent of current discretionary spending and 5 percent of military spending, which would save about $1.3 trillion over 10 years, Welch said. Then, freeze regulations until the current 9.1 percent unemployment level gets below 6 percent.

He also wants changes in entitlements, starting with means testing benefits. "I shouldn’t be getting Social Security. I shouldn’t be getting Medicare benefits at the level I’m getting," Welch said.

Obama's support for a millionaire's tax is "a transfer payment. You take if from one pan, put it in the other. It doesn’t work," he said. "They are spenders. They believe government should do more. They don’t believe jobs come from the private sector. They believe government creates jobs," he said.

Welch said he is backing former Massachusetts governor Mitt Romney among the Republican contenders for Obama's job in 2012.

"I want to take this administration out," Welch said. "They don’t understand how to create jobs...America is the greatest country in the world and we have everything going for us except a government that is not supportive of capitalism."

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