Investment Can Thrive, but Fiscal Fix Needed: Rubenstein

Policy uncertainty isn't necessarily a barrier to private equity investment, but elected officials must come to grips with spending and debt that could eventually crush the U.S. economy, Carlyle Group co-founder David Rubenstein said Friday.

David Rubenstein, co-chief executive officer of Carlyle LP.
Jason Alden | Bloomberg | Getty Images
David Rubenstein, co-chief executive officer of Carlyle LP.

"The uncertainty that might exist now is a good thing for certain types of private equity investments, " said the managing director of the private equity giant .

"You make most of your money when you're doing things in an uncertain environment, " he said. "So this equilibrium is the kind of thing that people like us like."

Rubenstein added that a short-term "grand bargain" that prevents the U.S. economy from going over the fiscal cliff was unlikely in the lame-duck session of Congress, which runs from Election Day into January 2013. Still, the next president must come to terms with the burgeoning deficit. (Read more: Five Players Who Can Drive Us Over the 'Fiscal Cliff' .)

Opening the Baron Portfolio
Opening the Baron Portfolio   

"The most important thing the next president has to do is resolve the uncertainty of the debt and deficit, " Rubenstein said, adding that it was impossible to predict whether either President Barack Obama or Republican nominee Mitt Romney would be better for the economy .

Whoever is elected, "what I hope he'll do is … recognize the country cannot continue to have $16 trillion in debt and a $1.3 trillion annual deficit, " he said.

Despite the soft U.S. growth, Rubenstein said there were still pockets of strength worthy of investment, such as the manufacturing sector. He cited DuPont and Sunoco Logistics as manufacturing-related stocks Carlyle has recently invested in.