Responding to record demand for foreign workers and the beating of the “I can’t find enough American talent” drum by Bill Gates and other prominent business leaders, Republicans in the U.S. House of Representatives are urging Congress to raise the H-1B visa cap.

H-1B visas allow foreigners to work in the United States for up to six years to fulfill specialty positions – usually tech-related – that require at least a bachelor’s degree. To keep the loss of American jobs to a minimum, the government imposes a yearly limit of 65,000 visas with an additional 20,000 allocated to foreigners with advanced degrees from U.S. universities.

Earlier in April, the government received 163,000 requests. That means filers have a 50 percent chance of getting an H-1B worker for next year, especially since the system is designed to be random. Literally, American companies have to win the lottery to get foreign talent.

With so much demand, America must really have a critical technology talent crunch, right? My answer is “No.”

Yes, India and other developing countries are outpacing us in the engineering department. And yes, some skill sets are hard to find here. But I believe there is far more talent in the United States than advertised. One needs only to look at the dot-com crash of the early 2000s. As American high-tech workers lost their jobs in droves, H-1B applications still poured in.

And this continues as the country is facing a weakening economy.

Proponents, however, say a weakening economy is when you need more – not fewer – foreign workers because American companies need to be extra competitive to survive. Large tech firms and groups such as the American Electronics Association are pushing for increased caps and new rules, saying American competitiveness is hurt because the country does not have enough high-tech workers. Said Gates to a recent House panel: “The current base cap of 65,000 H-1B visas is arbitrarily set and bears no relation to the U.S. economy’s demand for skilled professionals.”

As a result of the growing support, this could be the year when more liberalized H-1B laws are passed. There currently are several bills floating around, including the “SKIL Act,” which would raise the number of visas to 115,000 and increase the cap by 20 percent each year afterward.

That would be a mistake. Yes, we are living in a flat world and many companies have to bring in foreign talent. But another big reason why these companies want more H-1Bs is simply to import cheap labor. Rules on H-1B wages are hardly ever enforced. And employees from India and China are happy to work for wages below American standards.

In my recent travels across small-town America, I have seen first hand the high number of skilled workers – American workers – who want to be employed in technology fields. I see many of them who want to be designers, programmers and developers. There are states such as the hard-hit Michigan and Wisconsin that have plenty of young college graduates who would be great candidates for Microsoft, Google and other high-tech firms such as Tenrox.

Why do we want more workers from Bangalore? We should be looking to Detroit, Madison and Milwaukee first.

You want more students to take high-tech courses in school? How about offering fewer jobs to foreigners? Let’s send a message to young Americans that high-tech careers are safe – as safe as any job can be in a flat world – as long as they train to compete in that flat world.

What Microsoft and others should be doing is setting up more development centers in hard-hit markets – whether they’re hit by lost manufacturing jobs or the real estate crisis. Not only would those companies get a workforce willing to work, but they’d get employees cheaper than in places such as Redmond or Mountain View. Government can help by providing research and development tax incentives for companies that invest in small town America; just look at Canada’s successful R&D tax credit program as an example of a model that can be adopted for America’s hard hit states.

Global IT giant Wipro is taking a page of that strategy. The company – one of the world’s largest offshorers – is currently building software development facilities throughout the United States that will employ hundreds of recent college graduates. Wipro CEO Azim Premji, realizing that it’s good business to be developing in the places one is selling, trains the employees in intensive programs and puts them right to work. We’re not talking six-figure salaries here. But these are 20-somethings who are getting valuable educations.

So, what’s the best part of these two strategies? Premji would not be reversing a 20-year offshoring model if he didn’t believe it wasn’t good for shareholders. Ultimately, though, more American IT workers will be entering the market. That means companies can rely less on going through government bureaucracy to find the world’s top talent and rely more on fostering technology talent right here in the United States.

I’d like to hear your thoughts. Do you think the United States really does have a critically-short amount of high-tech workers? Or do you think the claim is overblown? What do you think should happen with the current H-1B system in today’s flat world?