It's because of No Child Left Behind-- if passing more kids means keeping your job, and failing kids means that the whole school loses money, then that's what you're going to do. Test scores improve because teachers stop teaching/encouraging thought and start teaching the kids how to pass the test, ie: spoonfeeding answers.
You can't simply 'raise the standards' and expect everyone to pass-- for various reasons, kids don't have the same socioeconomic backgrounds, don't have the same family lives, don't have the same support networks... and it's going to have an effect. Seriously, picture yourself s a teacher with this kid who has severe ADHD, whose dad is a heroin addict and mom is dead and you have to get him to the point where he's passing/scoring decently on tests, or else not only you look bad, but your whole school looks bad AND loses money... what are you going to do? Are you going to spend hours and hours of your own time with him, trying to turn his life around, while his own parents refuse to? Are you going to deny the other kids the chance to get help because he needs all of your time and effort? Remember that the other kids also need to pass in order for you to get funding. So yeah, chances are you're going to go for the quick fix and hope that everything sorts itself out in time.
Just one of these kids can seriously bring a whole class down, and set 30 or however many kids back for a whole year, which of course means that when they go on to their next year, they're behind the others, which of course makes them feel stupid compared to others who may not have had one of those kids in their class.
It's not the education system that's broken-- it's society in general. I wouldn't call myself a conservative, but a return to traditional values where parents actually raise their own kids and don't rely on TV/iPhones/the internet to do the job for them is probably the only solution... and yeah, that's just not going to happen. You might notice if you look around that the kids with the best scores/best performance usually have parents who come from cultures/traditions of discipline and strict-but-fair authoritative (not authoritarian) parenting. The problem is that parents nowadays are focused on the instant gratification that comes with giving their kids everything they want as opposed to the long-term gratification of raising productive members of society.