Kerry on Tuesday questioned Bush's credibility and fitness to be commander-in-chief while Bush said the Democratic challenger's tax hikes for wealthy Americans would hurt small business owners and cripple their ability to create new jobs.
Kerry said Bush had "failed in his fundamental obligation as commander-in-chief to make America as safe and secure as we should be".
He accused Bush of trying to hide until after the election news that nearly 380 tonnes of powerful explosives had disappeared from an Iraqi military installation at the time of the US-led invasion in March 2003.
"He failed to secure Iraq and keep it from becoming what is today - a haven for terrorists," Kerry said.
"Mr President, what else are you being silent about? What else are you keeping from the American people? How much more will the American people have to pay?" asked Kerry.
Election fever is starting to sweep
The Democratic challenger said Americans "deserve a commander-in-chief who will tell the truth in good times and bad. This president has failed the fundamental test".
Bush, on his part, questioned Kerry's ability to fight the war on terror.
"On the largest national security issues of our time, he has been consistently wrong," Bush said, citing Kerry's opposition to the 1991 Gulf war and saying Kerry opposed former president Ronald Reagan's stance against the Soviet Union.
At a rally in Dubuque, Iowa, Bush said Kerry "has no plan, no vision, just a long list of complaints".
Vice-President Dick Cheney also defended the Bush administration's handling of weapons sites in Iraq and said the missing high-grade explosives might not have been there when US troops arrived.
The International Atomic Energy Agency, the Vienna-based nuclear watch dog, disclosed the disappearance of the explosives and said the site was never secured by the US military after the invasion.