SAN DIEGO -- The United States must enact comprehensive immigration reform because the current system doesn't work, presumptive Democratic presidential candidate Sen. Barack Obama said Sunday at the National Council of La Raza's annual conference.

The Illinois Democrat said that while the country needs to secure its borders and crack down on employers who abuse immigrant labor, there needs to be a pathway to citizenship for undocumented migrants.

"While we work to strengthen our borders, we need a practical solution for the problem of 12 million people who are here without documentation, many of whom have lived and worked here for years," Obama said.

"That's why we need to offer those who are willing to make amends a pathway to citizenship," Obama said. "That way, we can reconcile our values as both a nation of immigrants and a nation of laws."

An exuberant crowd of about 2,000 people listened to Obama speak during a brunch program at the San Diego Convention Center, while others watched a live video feed nearby.

He called for an end to "hateful rhetoric," and said Latinos are counting on the country to "rise above the fear and demagoguery, the pettiness and partisanship, and finally enact comprehensive immigration reform."

He said the "system isn't working" when millions are "living in hiding," when companies hire undocumented immigrants instead of using legal citizens to avoid paying overtime, and communities are being "terrorized" by immigration raids.

Obama addressed the NCLR, which touts itself as the largest national Hispanic civil rights and advocacy organization in the country, one day before his rival, Sen. John McCain, R-Ariz., is to do the same in a bid to woo Latino voters.

During his speech, Obama said the issues facing the Latino community go beyond immigration.

He spoke about the importance of turning around the economy, the housing crisis, healthcare and education.

"This election is about the Latino students who are dropping out of school faster than nearly anyone else," Obama said.

He also called for better care for veterans.

"We've all walked by a veteran whose home is now a cardboard box on a street corner," Obama said. "It's a disgrace."

Obama announced a plan to give small businesses tax credits to provide health care to employees. He said it was an idea first championed by his former Democratic presidential rival, Sen. Hillary Clinton, D-N.Y.

"It's a plan that would help more employers provide health benefits for their workers, instead of making it harder for them as Sen. McCain would do," he said.

Obama trailed Sen. Hillary Clinton among Latino voters in the Democratic primaries, but a poll by McLaughlin & Associates last month showed Obama has much Latino support as Sen. John Kerry had before the 2004 election.

He concluded his half-hour speech by calling on Latinos around the country to vote in force in November, saying the election is "in your hands."

"I know how powerful this community is," Obama said. "Just think how powerful you could be on Nov. 4 if you translate your numbers into votes."

Before speaking to the NCLR, Obama addressed via satellite the American Federation of Teachers Convention in Chicago. He also attended a fundraiser Sunday morning at the El Cortez in downtown San Diego.

About 200 supporters donated $2,300 to attend a general reception, and some paid $28,500 to have their pictures taken with the candidate at a VIP breakfast, according to a media pool report.

Los Angeles Mayor Antonio Villaraigosa introduced Obama at the reception and former UCLA and NBA basketball player Bill Walton also attended.

Obama spokes for about 20 minutes, and at one point a group of about five people held up signs on the sidewalk outside the event that said "No War in Iran" and "No war, No FISA, no occupation," and shouted "no condition, end the occupation."

The candidate paused, not sure what they were saying at first.

"I want to end that occupation, I do. I was out trying to figure what they're saying," he said to applause. "I'm for that, that's why I'm running for president of the United States of America."

Later on, he referred to chatting with Walton.

"I was talking to Bill Walton -- he knows something about winning -- and he said, `well I'm worried we Democrats sometimes we get too soft, we're always on the defensive and these folks are going to play mean and they're going to play nasty,'" Obama said.

"Listen, I'm skinny, but I'm tough and we are going to be giving as good as we get and we are going to be responding swiftly and forcefully but always truthfully to any attacks that are launched," he added. "But understand that the power of this election is to remake the rules of politics, it's not simply playing the game they play, but to change the game."

McCain's campaign set up a conference call today for former U.S. Treasurer Rosario Marin to say that Obama has not shown any leadership on the immigration issue while McCain risked his political career to support immigration reform.

"One of the things that we want to make clear is that probably Sen. Obama is going to do the same thing that he has been doing when he has been meeting with different groups throughout the nation that are Hispanic organizations," Marin said. "Most likely, he will say the same thing he's been saying, and that is that Sen. McCain has changed his mind on immigration reform. And nothing could be further from the truth."

Marin said McCain went against his own party "at great political peril" by supporting immigration reform, but did what "he thought was the right thing to do."

He said immigration reform almost passed, "but it didn't because of precisely people like Sen. Obama, casting votes that eventually unraveled the immigration package that (McCain) had so carefully put together."

He also said McCain has listened to what the American people want, "and the American people have said that they want to secure the borders."

Obama, he said, "basically has not shown any leadership, has not shown any great peril, and he's just joining the chorus now that this issue is before him and he's attempting to reach Hispanic voters. With all due respect to Sen. Obama, I think that any attacks he has against Senator McCain are unfounded and they're merely political ploys."

He said Obama "says one thing and then does, at the moment of truth when he has to cast votes, he actually does something that goes against what's in the best interest of Americans."

Obama will head to the traditional Republican stronghold of Newport Beach for another fundraiser, where tickets are again priced at $28,500 for a VIP reception and $2,300 for a general reception. The ticket prices match the maximum allowable contributions to national party committees and candidates.