Half-baked idea: Rather than not putting people in, start letting long-servers out to make room.
Lots of problems with it, sure, hence half-baked, but there must be quite a few long servers whose early release would be less harmful than letting the unimprisoned receive no punishment (or even extended inconvenience) at all.
Or are prisons already full of people who are more harm than the people we can't fit in there any more?
I mean, if hospitals can kick people out when they need the bed...