The issues are basically correct on both sides, however there exists the problem fact that while prison populations are - and have been on the increase - actual crime rates have been declining over the past decade plus. This is indicative that while crime has been diminishing, arrests and convictions for existing laws have been increasing disproportionately.
The reason for the "peak" in the stats in the 90's is partially due to the discovery by private prison investors and private sector corporations of the federal PIECP program. This program allows partnerships between private sector companies and prison industries to use prison labor to manufacture their products or provide their services, which allows lower overhead and increased profits. In the mid 90's corporate America discovered the program and began to manipulate it. At the same time, prison numbers began to increase while the crime rate declined. This was a direct result of the realization of the amount of labor needed to fully exploit the program.To use the program to the maximum benefit, there had to be a continuous supply of manpower - whether the crime rate was holding steady or in decline.