[mmcd]

Generally speaking, there are 4 basic theories that underly the purpose of punishment:

Retribution

Incapacitation

Deterrence and

Rehabilitation

Rehabilitation gained favor among decision makers and commentators during the period between about 1900 and the late 1970's. Since then, it has lost its popularity.

Currently, the theory of "limited retributivism" is gaining in popularity. The upper and lower bounds of sentences are set according to the principle of retribution, and where a sentence falls between those bounds is determined by weighing the other 3 purposes.

It is also interesting to note that several states have removed rehabilitation as a purpose from their sentencing statutes.

Your argument assumes that rehabilition is (or should be) the sole purpose of punishment. This is certainly not the case, and in some states, rehabilitation has been removed from the sentencing calculus entirely.

Also, as another poster already mentioned, advocating a "softer" system of criminal punishment is politically unpallatable. In election campaigns, it's really easy to create a 20 second sound-byte that someone is "soft on crime", but it's a lot more difficult to explain why one thinks prison reform is desireable or necessary.