CES: CEOs tackle U.S. innovation--the good news and bad

At CES, a show that's about nothing if not rapid innovation, three high-profile CEOs sat down today to dissect the complex web of factors that they say hinders the U.S. from keeping pace with the rest of the world.

Speaking on an "Innovation Power Panel" this morning moderated by CES President Gary Shapiro, Cisco CEO John Chambers, GE Chairman and CEO Jeffrey Immelt, and Xerox Chairman and CEO Ursula Burns agreed that a faulty education system, plus policies around exports and the highly emotional issue of immigration, all hold sway over the pace of U.S. advancement.

"We have D minus in education; we need to work on bettering this," Burns said.

Government and business should work together to raise educational standards, Immelt asserted, focusing specifically on K-12. "Our interests are clearly aligned."

But while President Obama is trying to force partnerships with businesses, government, and education through foundations, Burns said, many people won't invest unless they see "outputs," adding that education is failing, in large part, because those outputs are not there.

But education isn't the only obstacle, the Xerox CEO said, turning to tax policies and high employee costs in the U.S. Chambers says he has a preference for hiring in America, but current condition are working against it.

What's more, foreign profits bear the burden of getting double-taxed--once in their country of origin and once when they return to the U.S., Chambers said, a policy he said encourages companies to invest foreign profits overseas, hurting investment at home. Unemployment in this country would be instantly reduced, he predicted, were companies allowed to bring profits back.

That said, jobs go where the markets are, Immelt stressed. "I never apologize for putting a factory in China if my growth is going to be in China." The good news, in his eyes, is that American workers are more competitive than they were 20 years ago.

Focusing more on the plusses, Immelt noted that the U.S. is "still the most innovative and entrepreneurial country in the world." Lower-level employees have more access to top executives than in other parts of the world, he said, and employees are more willing to express their opinions in America than in other countries (a point that Malcolm Gladwell tackles in his book "Outliers").

Each CEO also had the chance to briefly detail what his or her company does to stay innovative, and all focused--not surprisingly--on things like decentralized management; investing financial and human resources in R&D; and being quick to market.

CNET's Tom Krazit contributed to this report.