What is hurting Bush is the violence in Iraq, which we all knew could be a problem, and which the terrorists are counting on being a problem.
The violence is being financed largely by Iran. The Mad Mullahs running that country know that a Kerry win is in line with their agenda. Kerry will do nothing about Iran aquiring a nuke. The mentally ill ugly little tyrant ruling N. Korea also desires a Kerry victory. The Clinton administration, along with the ever incompetent Jimmy Carter allowed the little screwball to go a long way toward getting nukes of his own. No doubt he is financing a good deal of the terror there, as well (S. Korea has a couple thousand troops in Iraq).
I am unaware of any polling evidence that the violence in Iraq is actually hurting Bush. In virtually every major poll this week on the subject, solid majorities say that things are not going well there but that Bush is the best man to deal with the problems. They're right.