The U.S. economy's growth rate could be double what it is today, but policymakers are obstructing the nation's potential, says former Federal Reserve Governor Robert Heller.

Economic conditions may not be deteriorating, but the nation isn't progressing either, he noted.

"We may be out of the woods, but we are [still] walking in a mud field," Heller told CNBC.

Editor's Note: The Final Turning Predicted for America. See Proof.

"We are stuck in a range of 1 to 2 percent growth, which is not where we should be. If you would take some of the constraints off the U.S. economy, it could be growing a lot faster at 3 to 4 percent," he added.

One way policymakers are stifling the nation's economic potential is through regulations that prohibit oil and gas drilling on federal land. Heller believes those restrictions should be eliminated.

In addition, the nation with has bountiful untapped resources, including human resources, that could be put to work to benefit the economy. As supporting evidence, Heller directed attention to corporate balance sheets.

"U.S. corporations have the largest cash holdings they have ever had, so the potential for growth is there, but you've got to let it happen and not restrain it," he told CNBC.

His remarks followed a pleasant surprise from the Commerce Department, which reported the nation's gross domestic product grew at 1.7 percent during the second quarter, vastly exceeding expectations. While the median estimate was for 1 percent growth during the quarter, some analysts' forecasts were much lower.

"One must not forget that the U.S. economy has been experiencing a dramatic fiscal tightening in recent months. Against this backdrop it is actually quite remarkable how resilient above all the household sector has been throughout this period," Harm Bandholz, an economist at Unicredit Research, told The Washington Times.

Adding to the positive results, the Commerce Department also issued revised data indicating the U.S. economy grew faster than previously thought under the Obama administration. Growth from 2009 to 2012 was revised from 2.1 percent up to 2.4 percent.

People have "been understating the strength of the recovery" for years, Justin Wolfers, an economics professor at the University of Michigan, told The Times. But, "the economy was motoring along."

Editor's Note: The Final Turning Predicted for America. See Proof.