This policy analysis examines structural inequities in the U.S. criminal justice system, focusing on sentencing disparities, the economic imbalance between incarceration and education, and the limited effectiveness of punitive models in reducing recidivism. The paper synthesizes evidence from government data, research institutions, and legislative developments to argue for a shift toward evidence-based justice, trauma-informed statutes of limitations, and incentive realignment within correctional systems. A technical appendix outlines a comprehensive economic model designed to transition correctional institutions from recidivism-dependent funding to outcome-based rehabilitation.