Addressing a large audience of academics, government workers, and others in Washington on Monday in his role as chairman of the board of the New America Foundation, Schmidt laid out the myriad ways in which the government could open the doors for innovation and long-term economic growth.
While he claims he is not interested in becoming President-elect Barack Obama's chief technology officer, Schmidt's talk on Monday gave not only technical solutions to problems like the need for new energy sources and immigration reform, but policy-based answers as well.
Google CEO Eric Schmidt on Monday discussed ways the government could spur economic growth through innovation and investments in infrastructure.
(Credit: Stephanie Condon/ CNET News)Google has already made inroads influencing how the government conducts its everyday business, as evidenced by Obama's use of YouTube, and the firm opinions Schmidt offered Monday indicate the company could have a strong voice in the political philosophy of the next administration as well.
"This may be the toughest economic time that most of us will face in our lifetimes," Schmidt said, but it is also a time to look for opportunities.
"Let's not just have bailout programs," he said. "Why don't we use the stimulus money to get infrastructure built?"
Schmidt emphasized the need to invest in infrastructure, both physically and otherwise. He suggested opening up the development of smart electric grids to more innovation and creating more competition among broadband providers.
"We have to find the right balance of incentives," he said. "We've had the most extreme version of the free market approach, and we've seen some of its consequences."
Those incentives, he said, could include giving matching funds to state utilities for energy efficiency programs they already run. It could also mean funding auto companies that meet emissions standards.
Government systems could also benefit from modeling the open nature of the Internet, Schmidt said.
"Open systems have this clear promise of innovation and greater choice," he said.
He called the Federal Communications Commission's decision to open up unused broadcast TV spectrum for unlicensed use an "act of remarkable courage, and one which we applaud."
"You never know where innovation's going to come from, but with an open platform, you welcome it," he said.
With that in mind, Schmidt said it is essential that "the small start-ups with funny names get founded and get funded."
He applauded Obama's promise to double federal funding for basic research, calling it "the core aspect of America's competitiveness," but one that is dependent on government funding.
Other steps can be taken to help the U.S. maintain its competitiveness, he said, such as reforming visa policies for skilled workers.
"We train these people, we bring them to the country, and then we don't give them a visa to work here where they would pay lots of taxes," Schmidt said.
As the government embraces innovative reforms, it should reform its own practices, Schmidt said, to create more public engagement and restore trust in government.
"We can stream almost all public meetings," he said. "The bandwidth is there, so why don't we get more people involved?"
Stephanie Condon is a staff writer for CNET News focused on the intersection of technology and politics. She is based in Washington, D.C. E-mail Stephanie. 
