Besides the fact of institutional inertia weighed down with newly created interest groups & the punitive morality that has been disseminated for over a couple of decades (and is now reflected in the level of support for death penalty, for instance), there is another problem: once you increase the rate of incarceration, you are not only changing the shape of the present but also that of the future, in that ex-convicts, even after serving their time, will be still stigmatized and face a prospect of underemployment and lower income. The Sentencing Project says that "Research has documented that a first-time arrest for a property crime results in a 7% decline in incomes." The rate of recidivism is hence very high (60 % or so, according to the Sentencing Project). And the more convictions there are in your past, the longer your sentence will be, even without the three-strike law, etc. Finally, consider that as Doug noted earlier, U.S. economy can't get any better (absent a massive institutional change). What will happen with the arrival of the next downturn? Some rethinking of crime policy must be going on among CJ professionals, journalists, and some policy-makers, but, still, it's too little, too late.
P.S. The figures are from the following site: <http://www.sproject.com/test/pubs/tsppubs/sumpolicy.html#9000>.