I don't think kids have any more or less potential now than they did 10 or 20 years ago. I sat next to kids dumber than me and smarter than me when I was in school. I see kids on the dumb end and the smart end in schools now. I do think, however, schools are being pushed to the limit in what they can handle. Classes are overcrowded. Teachers are taxed beyond their skills to simply keep a classroom managed and on task, much less actually teach a full lesson. Those lessons are given to them to teach rather than allowing them to come up with tailored ways to teach them to specific classes. Too much is tried to be packed into a short period of time so if there are children that fall behind they're simply left behind, as there's no time to go back and help them understand. The school day in general is simply too long on the younger end of things. Younger kids don't have the attention span to stick with a lesson for 7 hours straight. This applies for a lesser extent for older students, but they're maturing enough they can usually handle it better.
While it's getting better, there are still far too many standardized tests. Last year and the year before were the worst I'd ever seen. I did the math and something like 1/4 of the school year had some sort of testing going on in that school. (I'm not saying every student was testing for 1/4 of the year, but the school had testing of some sort occurring for about 1/4 of the days school was in session.) This year is much better though.
Along side all of this you have younger teachers who are dissuaded from applying or once accepted, from staying by horrendously low wages and a complete lack of job security along side a big brother mentality where you're being watched directly by at least 3 levels of administration above you and all the paperwork and wasted time that go along with those sorts of assessments. You have older teachers which have given up because of all of this, they're just trying to get to retirement and they, if they got in early enough, still have tenure and the worst side of tenure is showing, where you have a teacher that doesn't care about their job anymore and is almost impossible to fire.
Schools are pushed harder and harder to do their own fund-raising if they want to pay for things which takes time out of everyone's schedule. Currently there's a "Positive Behavior System" in place around here where students are supposed to get rewards for good behavior. But the suggestion of how to pay for those rewards was literally "Go around to local businesses and beg." The first year it was implemented much of it came out of employees pockets instead.
Technology is pushing its way into schools which aren't prepared for it. Testing is going from previously paper-based to all computer-based testing, but they're throwing hundreds of computers that require internet access to take these tests onto school networks that are not prepared for it. Teachers haven't been properly trained on the new technology and testing methods (which change every year). Students are pushed into computer based testing before they even have proper computer skills. You have a mix of old technology bought 10 years ago and new technology bought recently that all have to talk to each other, work somewhat efficiently and all do the same job. Schools are given very little help in regards to setting up this technology. Locally some schools don't even have a dedicated technology person on staff. And most of what staff there is is not suited to he job, many being transferred in from other departments. (Oh, you can use Excel? Well you're good with technology.)
Now I'll note, this is all local observations and may be better or even worse in different areas of the US. But based on what I've seen, our system is screwed up royally and the fact that kids and teachers together can accomplish ANYTHING is a miracle. It's broken and needs to be fixed, but all the attempts so far by government legislation and mandate have made things even worse. (By some theories this is on purpose so we can go fully privatized school system, but that might be bordering on tin-foil land.) I don't know the solution, but we haven't found it yet.
As for teaching methods, calculators, fingers and toes... Every kid learns differently. There's no one set solution for teaching every kid that'll work. Best we can do at the moment is find one that works for more kids than others do and hope the ones it doesn't work for can pick it up on their own. That is, until we stop treating every kid as identical and equal and allow ourselves to employ different teaching methods and speeds and give teachers enough time and room to stop and help the ones that might fall behind a bit in any given group.