This chapter first examines how the Obama administration was able to promote its K-12 agenda using the vehicle of economic stimulus policy, and how that agenda compares with prior federal and state education policy. As a basis for explaining President Obama's policy choices, a second section discusses the ideas and political dynamics shaping his K-12 initiatives. Of particular interest is why a Democratic administration would select policy strategies that have angered the teacher unions, one of the party's key constituent groups. The third section outlines the constraints and opportunities facing the Obama administration as it attempts to make its stimulus initiatives permanent through the reauthorization of the Elementary and Secondary Education Act (ESEA), and then to implement that policy in thousands of individual classrooms. One of the hallmarks of the education stimulus has been the disproportionate pay-off in state policy changes that the competitive grant portions have generated. The final section assesses the likelihood that the strategy embodied in the Race to the Top and Investing in Innovation (i3) Fund initiatives could be broadly applicable as a strategy for gaining federal leverage over decentralized policies. (Contains 21 notes.) [This report was prepared for the Working Group on Obama's Agenda and the Dynamics of U.S. Politics, Russell Sage Foundation, New York City.]