Google's Schmidt: Innovation must come first

Google's Eric Schmidt calls for new government spending to improve broadband and encourage alternative energies.

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In addition, the US government needs to give billions of dollars worth of tax breaks to producers of solar, wind and other alternative energies, he added.

"We can reduce energy costs, create jobs and generate enormous economic benefits for generations to come," he said. "The missing ingredient has been political leadership."

Schmidt laid out a wish list for legislation in the next Congress, with patent reform and loosened standards for allowing foreign graduate students to stay and work in the US at the top of the list. Schmidt's call for allowing more foreign workers to come to the US may conflict with Obama's; the president elect has been cool to the idea of expanding immigration programs such as the H-1B skilled worker program.

The US should want the best and brightest workers to remain here, Schmidt said. Making foreign students go home after educating them is "bizarre, it's disgusting," Schmidt said.

He called on the US government to investment in broadband, allowing customers more choices of providers and bringing broadband to the corners of the nation that still do not have it. Only about 55 percent of US residents have broadband, ranking it about 15th in the world, according to the Organisation for Economic Co-operation and Development.

"We invented this stuff, and now we're 15th in the world," Schmidt said.

Broadband is an essential piece of infrastructure to build a 21st century economy, he said. Obama has also called for new broadband incentives.

Schmidt also called for a more open government, in which citizens can be more heavily involved in decision-making. He called on lawmakers to involve citizens while writing legislation, and he praised Obama for putting a recent speech on Google's YouTube, where it can be debated.

Government needs to encourage more debate and involve more citizens in its processes, he said. "People care passionately about these things, and they obviously have a lot of time on their hands," he joked about bloggers and Internet users who held candidates responsible for misstatements and lies during the campaign.

He also called on government to embrace video, blogging and other online technologies. "Government hasn't embraced, generally, the tools we use every day," he said. "It's time."