Reading Schmidt I got the same feeling I get when reading Bill Gates talk about the teacher's unions: there's a lot of diplomatic-talk going on.

I think Schimdt is smart enough to see the truth. He's just playing the role of "diplomatic reporter" for the crowd. His calculus is probably that it's better to be very shy about exposing the truth and hope for change in the long run. It does not make sense to antagonize the people you will have to be working with in the future. Better to praise them slightly, acknowledge a few flaws that are non-controversial in nature, and express some sort of vague hope for the future.

Might work. Might not.