The U.S. 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 U.S. 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 U.S. 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.