Google's Schmidt: Innovation must come first

The U.S. government needs to pump billions of dollars into alternative energy efforts, broadband infrastructure and research in an effort to rebuild the nation's economy, Google's CEO said Tuesday.

It's time for the government to take a new approach toward issues such as energy independence and broadband adoption, after recent years have shown that private efforts are not enough, said Eric Schmidt, Google's chairman and CEO, said during a speech in Washington, D.C.

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The economic bailout plans now being debated in the U.S. Congress should focus on rewarding innovation and putting people to work by building broadband or energy-grid infrastructure, instead of propping up bad investments, said Schmidt, who has served as an economic adviser to U.S. President-elect Barack Obama.

"To address our economic problems and create jobs, we need to put innovation first," Schmidt said. Out-of-work contractors could be put to work building a smart energy grid or broadband infrastructure, he added.

Schmidt decried U.S. government policies of the last eight years, which in his eyes have relied on the private sector to fix many ills. It's time to look for new ways for government and private businesses to work with each other to address problems, he said. His ideas, however, will likely face opposition from lawmakers concerned with federal deficits; at one point Schmidt talked about $10 billion just for tax incentives for alternative energy companies.

But the United States is facing a major crisis in energy, with dwindling oil supplies and global warming that could cause significant problems "in our lifetime," said Schmidt, speaking at an event sponsored by the New America Foundation, a think tank focused on broadband, wireless, and other issues. "We're at the point where we've got to get this right," he said.

Schmidt talked about Google's plan to wean the United States off fossil fuels by 2030. He called on the U.S. government to tie any bailouts of the U.S. auto industry to fuel economy standards, and for more states to follow California's lead and create regulatory incentives for power companies to save energy.

If U.S. automakers began to produce plug-in hybrid electric vehicles, customers could double their gas mileage, he said. Some research has shown that through hybrid power and lighter materials, vehicles could increase gas mileage by a factor of 30, Schmidt said. Those technologies need to be put into action to wean the United States from its addiction to foreign oil, he said.

In addition, the U.S. 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."