President George W. Bush and challenger John Kerry accused each other of misjudging the stakes and lacking the leadership to deal with Iraq and terrorism as they campaigned 60 miles apart Wednesday in Iowa, a state Bush narrowly lost four years ago. "The next commander in chief must lead us to victory in this war and you cannot win a war when you don't believe you're fighting one," Bush said in Mason City, a northern Iowa farming community. "My opponent also misunderstands our battle against insurgents and terrorists in Iraq, calling Iraq a `a diversion from the war on terrorism.'" Kerry, campaigning in Waterloo, said Bush failed to grasp what the United States faces in Iraq, where more than 1,100 U.S. soldiers have been killed. "If President Bush cannot recognize the problems in Iraq, he will not fix them. I do recognize them and I will fix them." With time running out before the Nov. 2 election, national polls say the race is very close, with some showing a slight advantage for Bush. Polls in key swing states like Florida, Ohio and Wisconsin also show the two candidates running about even, according to a report of the Associated Press.