In 1984, Congress passed a law called the Sentencing Reform Act. It was a well-settled fact that district courts were pretty arbitrary in their sentencing. Basically, this law was meant to fix the sentencing disparities.
The Sentencing Reform Act created the United States Sentencing Commission. The Commission mainly creates the Sentencing Guidelines. The Sentencing Guidelines amount to a table that measures crime. The table prescribes a term of imprisonment, probation, fine or whatever the punishment will be.
When the law was first enacted, the Sentencing Guidelines were mandatory. This meant that the District Court would follow the range of penalties that the Sentencing Guidelines created. If the District Court didn't follow the guidelines, it was automatically reversed by the appeallate courts. This is no longer true. A Supreme Court case, United States v. Booker, altered the original law. District courts are no longer required to sentence criminals within the strict tables created by the Guidelines. District courts must, however, still consult Guidelines and consider the statutory factors in the Sentencing Reform Act when they are sentencing criminals.
The sentencing guidelines work in this manner: There are two variables on the Sentencing Guidelines tables. The first is the "offense level," which is how bad the Sentencing Commission thinks the crime is. There are 43 offense levels. The second variable is the prior record of the defendant. There are six of these "criminal history" levels.
The application of the guidelines involves looking up the offense level, the criminal history, and finding out where the criminal's history and offense level intersect on the table. At that point there is a range of sentences that are available for that crime.
The sentencing guidelines establish the sentence range for every crime committed in the United States, for every individual criminal defendant. Even Martha Stewart.
Neat, eh?