The United States imprisons more of its own citizens than any other country in the world including China, who has a population four times the size. Five percent of the world's population and 25 percent of the total prison population is located in the States -- a population that has grown by 700 percent since commencing the war on drugs, forty years ago. Prison sentences are longer, less effective, and therefore more costly than in most countries, with many states spending more money per prisoner than is spent on education per student.

States now spend $51 billion per year on corrections, and over two million citizens are currently incarcerated in the United States, 65 percent behind bars for non-violent drug related offenses. In 2007, the Bureau of Justice Statistics reported combined police, judicial and correctional spending totaling $228 billion. It costs, on average, $78.95 per day to keep a single inmate locked up, more than 20 times the per-day cost of probation. A Pew Center on the States study indicates that there has been a 36 percent increase in prison time served since 1990, costing an additional $23,300 per offender, or a total of over $10 billion. Pew also states, “there is little or no evidence that keeping them locked up longer prevents additional crime.”

“Taxpayers, today more than ever, want their dollars to produce the best possible public safety results. The idea behind longer prison terms is that they will cut crime and recidivism. But for a large number of lower-risk offenders, that just isn’t the case. There’s a high cost and little to no crime control benefit,” said Adam Gelb, director of the Public Safety Performance Project.

As the Department of Justice indicates, over 60 percent of those incarcerated are expected to return to prison within three years.

With research and government officials suggesting that further increases in incarceration result in significantly diminishing returns in terms of making communities safer, the faulty prison system poses an unnecessary cost to taxpayers. It's no wonder, especially considering the economic situation in the United States, that bipartisan action in the case against prisons is coming to fruition. Aimed at reforming the “lock 'em up and throw away the key” approach, new laws are increasingly tailored to generate more fiscally sound and socially responsible forms of rehabilitation.

In 2011, 15 states passed reform legislation. California, who was court ordered to reduce their prison population on a humanitarian basis, passed a “realignment” plan in 2012, which sends offenders to county jails where authorities have much more lenience regarding rehabilitation placement than they do at state or federal prison. Under this plan, county authorities have the option to send offenders to mental-health treatment instead of jail or even “flash-incarcerate” offenders for just a few hours. Other options consist of counties sentencing offenders to home surveillance with GPS ankle monitors, community service, drug rehabilitation, and even vocational training for job placement.

California also recently passed an initiative, Proposition 36, which reforms the “Three Strikes Law,” allowing for approximately 3,000 convicted non-violent felons to become eligible to petition the court for a new reduced sentence. Some estimates suggest that such re-sentencing could save California taxpayers between $150 million to $200 million a year.

Instead of resorting to building new prisons, focusing efforts on treatment can help to reduce the high recidivism rate, in turn shrinking the prison population and saving money for governments in the long run. Drug addiction and crime often go hand and hand; crimes are often committed because of an ongoing drug habit and could be treated as a public health issue instead of necessitating correctional action.

In many cases, treatment along with education for non-violent substance abuse and mental health offenders is cheaper in the long run compared to incarceration. Not only do alternatives to incarceration benefit the state and federal budget, they also raise the economic prospects for offenders.

As New Jersey Governor Chris Christie recently pointed out, jailing non-violent drug offenders is an expensive mistake. “We’re warehousing addicted people every day in state prisons in New Jersey, giving them no treatment,” said Christie in a speech, correctly stating that drug treatment costs per year less than half of what it costs to incarcerate an offender for a year.

New York, which once had the highest incarceration rate per capita in the industrialized world, now operates one of the most robust networks of alternative and re-entry programs for non-violent offenders. There's been a 62 percent drop in people serving time for drug crimes and a 22 percent drop in the overall prison population since 2000. Among the 10 most populous states, according to Pew Center on the States, New York had the lowest incarceration rate and the lowest crime rate in 2010. This has allowed New York to begin shutting down prisons, saving taxpayers $72 million in 2011.

Prison downturn in New York is likely due to both drug law reforms and a recognition by law enforcement that alternatives such as drug treatment were needed. Since 2000, almost 200 drug courts have opened statewide, which divert offenders to treatment instead of prison.

A new type of investment, called a “social impact bond,” is also touted as a way to reduce recidivism rates in New York, and is “designed to use market incentives to encourage private funding for public problems.” The first investment in this new system comes from Goldman Sachs, who loaned $9.6 million to MDRC, a social services group. The group will aim to reduce recidivism rates among young males heading into Rikers Island, the main jail in New York City, by educating, training and counseling young inmates, hoping to reduce the likelihood of them returning to the corrections system once they are released.

Goldman stands to break even if the program reduces re-incarceration by 10 percent, and can earn as much as $2.1 million if the re-incarceration rate drops more than 10 percent. If the 10 percent goal is not met, the government will lose no money, but Goldman could lose as much as $2.4 million.

In an unexpected policy shift, tough-on-crime Texas, a state notorious for tough incarceration laws, is turning down proposals to build new prisons and recently closed a prison for the first time in its history. No longer ranked as having the highest incarceration rate in the country, Texas is now investing more money into programs such as in-prison addiction treatment, halfway houses, and other community-based programs.

These tactics, along with reforming probation laws, increasing the use of day reporting centers and location monitoring systems, have proven an effective method to reduce prison populations and saving money. The Texas prison population has dropped by 2,500, reaching its lowest numbers in five years.

Another promising example is Hawaii's Opportunity Probation with Enforcement (HOPE) program. HOPE has proven effective in its ability to cut drug offending by punishing parole offenders through more reasonable methods such as a few days of jail time, rather than parole revocations.

Perhaps the most effective means of lowering the national prison population would be to – as Libertarians such as Ron Paul and Gary Johnson campaigned on – end the war on drugs, federally legalize marijuana, and pardon all non-violent drug offenders. Non-violent drug offenders make up over 60 percent of the entire prison population. Pardoning non-violent drug offenders could reduce incarceration-related spending by over $30 billion a year.

For-profit prison privatization has become a popularly lobbied effort in recent years, with private correction companies such as the Corrections Corporation of America assuring state lawmakers that prison privatization will result in lower costs. Some have accused privatization firms of lobbying for stricter laws. Needless to say, the idea of companies and people profiting from increased incarceration rates creates many skeptics.

Contrary to the cost reduction promises of the private prison industry, private prisons in Arizona are actually losing money – $3.5 million a year – by incarcerating their prisoners in private prisons, a new report shows. Not only are they losing money, they are contractually bound to keep prison occupancy levels at 100 percent.

However, many former privatization supporters are moving away from this position in favor of focusing efforts towards a more straight forward reduction of prison population. The conservative network of state legislators, the American Legislative Exchange Council (ALEC), is a leader in this effort.

Once a strong advocate of prison privatization and mandatory minimums, ALEC has abandoned their work on privatization and are now exclusively focusing efforts on pushing out model bills designed to reform sentencing laws.

For the first time in nearly 40 years, US state prison populations dropped in 2010, according to a study by Pew Center on the States. Pew reported that while the study showed an overall decline, the prison population declined in 26 states while increasing in 24 states and in the federal system. It has taken decades, but the criminal justice system are looking for more practical solutions to crime, as incarceration is the most expensive and, in some cases, a ineffective method of reform and rehabilitation.