Yes, It's Possible to Reduce Both Crime and Incarceration at the Same Time
Crime is coming down faster in states where incarceration is declining.
If you let more people out of jail, is crime guaranteed to soar? Not according to this infographic from Pew, which shows that the country's decline in crime over the last five years has actually been greater in states that have reduced their imprisonment rates. (They do not, alas, compare states' rates in violent crime, property crime, and so on.)
Bonus link: Defenders of mass incarceration sometimes try to give it credit for the long slide in crime rates since the '90s. In a 2011 Reason article, Radley Balko showed why that argument doesn't hold up.