This is a backdoor immigration cut, nothing more. COVID is irrelevant. Remember that it's not just new entrants that need H1B processing: it's immigrants currently in the country that need to transfer their visa type (e.g., former students moving from OPT to H1B). What, are they supposed to leave or risk being denied a visa forevermore? Not to mention, they've already paused green card processing and shut down most o…
I think COVID is very relevant. But you are also correct that this action is in line with the present administration's immigration policies outside of COVID.
In the big picture on the global scale, we're looking at a back-peddling on globalization (which includes immigration and free trade). The echos of the Great Depression should be (but aren't) on the minds of policymakers and the public because this same isolationist and protectionist philosophy exacerbated the pain of the depression.