Over the last year, no education story has garnered more enthusiastic or sustained positive attention than Race to the Top, the $4.35 billion federal program intended to spur and support groundbreaking state-level reforms. The White House called state responses to the competition "overwhelming." Columnist David Brooks wrote that it was helping to prod a "quiet revolution" in American schooling. The head of one leading education advocacy organization said that it had prompted a "breathtaking" level of state activity, unleashing a "tremendous wave" of reforms. Seeking to build on these accomplishments, the administration recently asked Congress for $1.35 billion for a new Race to the Top grant and based its 2011 budget and the Elementary and Secondary Education Act (ESEA) reauthorization framework around the program's basic features. The consensus is that Race to the Top has been an unmitigated success. Such roseate assessments, however, fail to account for the numerous and high hurdles standing in the way of the program's ultimate success. Using multiple examples, particularly from the state level, this report chronicles and analyzes these obstacles, including the application's shortcomings, states' ulterior motives, the limited number of states making substantial policy changes, the weakness of many proposals, strenuous political opposition, and major implementation challenges. This report concludes that declarations of the Race to the Top's revolutionary impact are both premature and drastically inflated. Federal officials should reassess their overly optimistic view of the program and its theory of action and modify their strategies for ensuring that it accomplishes its mission. (Contains 115 endnotes.) [To view "Education Stimulus Watch: Special Report 1", see ED509613. To view "Education Stimulus Watch: Special Report 2", see ED509614.]