New York City has taken a baby step toward sustainability by introducing legislation that would require large retailers (5000 square feet or more) to a) set up recycling bins for plastic bags, and b) offer reusable bags for sale. The proposal does not specify what the bags would be recycled into. If they are used to make new bags, it will at least be a closed loop system requiring no fresh petroleum to make new bags. Not so if the bags are "downcycled" into plastic "lumber" and park benches. Products like this are bound to outlive their usefulness (they will get old and decrepit, the house's next owners will want a fresh look for the deck, etc) but will never biodegrade no matter how many centuries they spend in a landfill.
All this assumes, of course, that there is anything to recycle. The proposed law does not give consumers any incentive to bring the bags back to the store. Wouldn't it make more sense to just reuse a bag rather than use energy to recycle it? Read my other posts on plastic bags here, here and here.
For more on why recycling isn't all its cracked up to be, read The Plastic Fantastic Recycling Trap by Chris Turner.