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The cost of housing inmates is huge. Within just a few years, federal prisons could take up a third of the Justice Department's budget. But state prison populations are declining. States are closing empty prisons and saving millions.

How did state and the federal government wind up in such different places? Well, NPR's Laura Sullivan examines the history.

LAURA SULLIVAN, BYLINE: The federal Bureau of Prisons spends about $30,000 a year to house an inmate. That's low by prison standards. But the bureau's got more than 200,000 inmates. So that's more than $6 billion a year and every year, there are more inmates. At this rate, according to a study by the non-partisan Urban Institute, the Bureau of Prisons is going to suck up a third of the Justice Department's entire budget by 2020.

NANCY LA VIGNE: That is at great expense to other fiscal priorities.

SULLIVAN: Nancy La Vigne is director of the Justice Policy Center at the Urban Institute.

VIGNE: That affects the DEA, the FBI, grants to states and localities for policing, for crime prevention, for reducing gang violence.

SULLIVAN: Not to mention all those U.S. attorney's offices, civil rights work, and antitrust cases. The federal prison population has grown eight-fold since 1980. The bureau's prisons are over capacity by 35 to 40 percent. There's little money or space for rehabilitation programs.

VIGNE: Everybody wants to blame the jailer for the population. They're not the ones making the decisions about who goes behind bars - that's judges, that's prosecutors. That's Congress.

SULLIVAN: To understand how we got here, you have to go back to 1988.

(SOUNDBITE OF A POLITICAL AD)

UNIDENTIFIED MAN: Bush and Dukakis on crime.

SULLIVAN: The Willie Horton Campaign ad.

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UNIDENTIFIED MAN: Bush supports the death penalty for first degree murderers. Dukakis not only opposes the death penalty. He allowed first degree murderers to have weekend passes from prison.

SULLIVAN: Crime was at historic highs. George Bush and Michael Dukakis were battling it out for president. Bush's team put this ad on the air.

(SOUNDBITE OF A POLITICAL AD)

UNIDENTIFIED MA: Weekend prison passes - Dukakis on crime.

SULLIVAN: And Dukakis never recovered. It was a seminal moment that experts say ushered in two decades of tough on crime policies: mandatory minimums, three strikes you're out, truth in sentencing. No politician wanted to seem soft on crime. The prison population went up, way up and the crime rate went down. But now crime rates are at historic lows. Violent offenders were locked up, but also the crack wars subsided, data driven policing emerged. And now all those prisons are costing a fortune.

Adam Gelb is the director of the Public Safety Performance Project for the Pew Charitable Trusts.

ADAM GELB: There's been this assumption that if you wanted to reduce crime you had to lock up more and more people.

SULLIVAN: But in a recent report, Pew found that crime rates fell more in states that had actually cut their prison populations, than it did in states that had increased their populations. In recent years, 29 states have turned to programs like drug treatment, ankle bracelets, supervised probation for low level offenders.

GELB: It appears that we have passed a point of diminishing returns to where more and more prisons are not effective at reducing crime. At least not anywhere near as effective as a lots of other strategies that cost a whole heck of a lot less than prison cells.

SULLIVAN: And Gelb says money is critical here because states have to balance their budgets. The federal government, for the most part, does not.

GELB: People are sick and tired of this revolving door. They say we've tried this experiment. We quadrupled our prison population yet we still are seeing these people coming back and back, over and over again. There's got to be a better way.

SULLIVAN: Just three percent of the 200,000 federal inmates are there for murder, assault or kidnapping. More than half of them are there for drug crimes. Today's move by the Senate Judiciary Committee to move a bill to the Senate floor, reducing some drug penalties, could shrink the federal prison population in the future. As debate on the bill begins, Congress may want to borrow the notes of state lawmakers.

Laura Sullivan. NPR News, Washington.

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