Should Microsoft let go of foreign guest workers before it cuts American jobs? In broad terms, that's the policy debate in which the company has become embroiled since announcing plans for up to 5,000 layoffs over the next 18 months.

The debate was fueled over the weekend when BusinessWeek pointed out a Microsoft proposal, posted on the Obama transition site, calling for an expansion of the H-1B visa program in the weeks leading up to the layoff announcement. That's the program that lets foreign tech employees work in the U.S., for Microsoft and other companies.

In many ways, this is no surprise. Microsoft has lobbied for years to relax the restrictions on the program, letting more foreign workers participate. But the timing in relation to the layoffs is raising eyebrows among some of its critics.

The H-1B issue was initially raised by Sen. Charles Grassley of Iowa in a Jan. 22 letter to Microsoft CEO Steve Ballmer. "My point is that during a layoff, companies should not be retaining H-1B or other work visa program employees over qualified American workers," Grassley wrote.

Microsoft responded at the time that "a significant number of the affected employees are foreign citizens working in this country on a visa."

For another take on the issue, see this San Jose Mercury News report: Layoffs mean more than lost wages for H-1B visa holders. (Via Ben Romano of the Seattle Times.)