Washington  - President Barack Obama said reforming the US education system was critical to the long-term health of the country's economy as he outlined his reform plans in a policy speech Tuesday.

Obama, whose time has mostly been taken up with a deepening recession since he entered office in January, warned that suffering standards of education could not be ignored and threatened the United States' global standing over the long haul.

"We don't have the luxury of choosing to get our economy moving now and rebuilding it over the long term," Obama said in a speech before the Hispanic Chamber of Commerce in Washington.

"The relative decline of American education is untenable for our economy, it's unsustainable for our democracy, it's unacceptable for our children, and we cannot let it continue," he said.

Obama outlined the broad strokes of his education reform plans, calling for a bipartisan solution and tasking teachers, parents and students to take on greater responsibility.

Obama called out both political parties for holding onto "failed" ideas. He challenged fellow Democrats to accept an incentivized pay system for teachers, which rewards performance but has been opposed by teachers unions, and said schools must be willing to fire underperforming teachers.

Obama called on Republicans to lift their opposition to more funding for early childhood education programmes that have shown results.

Obama warned that the US was quickly falling behind the education standards of other countries, and noted that less educated workers had "borne the brunt" of an economic crisis that has cost more than 4 million jobs since a recession began in December 2007.

"The future belongs to the nation that best educates its citizens," Obama said. "My fellow Americans, we have everything we need to be that nation." (dpa)