My favorite quote is at the end: "Per the report, the Digital Service Academy would serve as a third reservoir for the best and brightest technology workers, but one that would ideally produce graduates imbued with a sense of government duty." ... because places like MIT and Stanford sure as hell don't! It looks like Schmidt just wants the next generation of students to forgo their dreams of starting the next Google.…
I can't speak for Stanford but MIT is extremely closely tied with the federal government. The Lincoln Lab for instance gets ~$1B/year from the Defense Department. The only reason MIT became a well known institution at all is because of its ties to the military.
Lincoln Laboratory is often called a "PhD graveyard" for good reason: it's where reject academics who were denied tenure go to die.