NEW YORK (TheStreet) -- Harvard Business School's U.S. Competitiveness Project released a report earlier today that said the government's lack of action is holding the U.S. economy back. 

Professor and cochair of the project Michael Porter joined CNBC's "Squawk Box" on Thursday morning to discuss the report. 

"This is sad. The report was sad," CNBC's Andrew Sorkin told Porter. 

"I think it is very disappointing. We're stalled in America. Our economic performance on many metrics is worse than we've seen in many generations," Porter said. 

That's because the U.S. hasn't made progress on fixing the things that are holding us back, he noted. 

"We're having a very bizarre political dialogue about a lot of things, but ultimately we're not moving ahead on tax policy, on infrastructure, on all the things we know we need to do," Porter explained.  

Despite these findings, large U.S. companies seem to be doing "quite well" because they can find ways around the country's weaknesses, he added. 

"If we have a bad tax policy, they have a global tax structure that works around it. If they can't find the right skills for their industry in America, they set up a facility in Latvia to do those things that they need to do," he said. 

Small businesses are the ones getting hit the hardest. Both the number of small business jobs added and the number of new companies created are retreating, Porter observed.

But he said the economy can still recover. 

"We have tremendous strengths in America, and the problems we have are fixable" he concluded.