"The locomotive that pulls our economy is investment in equipment and software," Smith said. "It's our reduced level of capital investment that has produced our low GDP growth rates and our high unemployment."
He blamed high tax rates at the corporate level worldwide. "You've got to stimulate investment in the United States through a lower corporate tax rate and a so-called territorial system," he said.
Smith, who was among the CEOs who met with President Obama on Wednesday at the Business Roundtable, advocates slashing the corporate tax rate to 25 percent.
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He also warned that going off the "fiscal cliff" of tax increases and spending cuts that are slated to hit in 3 1/2 weeks would likely cause an economic contraction.
If the U.S. avoids going over the fiscal cliff, domestic growth would increase by 2 percent and global growth would go up by 2.5 percent, he said.