The H1B abuse discussion comes up once every few months on HN and elsewhere but things have gotten a lot worse in the past 2 years with the lottery. There are a number of definitive and progressive steps that USCIS can take to prevent misuse by TCS, CTS and other consulting companies.
Just establishing a cap on the number of visas per company as a percentage of the workforce will solve this issue. This will work well for everyone (large tech companies, startups, small businesses) except the sweatshops. If i had to take a guess (not hard to verify), 95+% of employees of the consulting companies will be underpaid visa workers. The prevailing wage is a joke ($70k in the bay area for someone with 5 years experience) and enforcing salary based bidding isn't really a practical solution. It can easily be gamed or it will only be beneficial for a certain group of employers.
I wrote an essay two and half years back on how to fix this and it is sad that all those are still true http://ramanuj.me/fixing-the-high-skilled-immigration-proble...