The US president was in Cleveland for one of a series of speeches meant to show that he has a winning strategy on the third anniversary of the invasion of Iraq.
"In the face of continued reports about killings and reprisals, I understand how some Americans have had their confidence shaken," Bush said. "They wonder what I see that they don't."
The chaos in Iraq is a significant factor in Bush's plunging poll ratings.
Bush said that "the decision to remove Saddam Hussein was a difficult decision ... [but] the decision to remove Saddam Hussein was the right decision".
He said progress was being made, citing the northern Iraqi town of Tal Afar as an example of the change in military strategy first outlined in November 2005 that was now being implemented.
He said US and Iraqi forces had freed the town from the grip of al-Qaida and insurgents and it was now "a free city that gives reason for hope for a free Iraq".
"The decision to remove Saddam Hussein was a difficult decision ... [but] the decision to remove Saddam Hussein was the right decision"
George Bush, US president
American and Iraqi forces had said Tal Afar was used as a conduit for smuggling equipment and foreign fighters from Syria on the way to cities across central Iraq.
"Instead of coming in [to Tal Afar] and removing the terrorists and then moving on, the Iraqi government and the coalition adopted a new approach called clear, hold and build," Bush said. "This new approach was made possible because of the significant gains made in training large numbers of highly capable Iraqi security forces.
"Under this new approach, Iraqi and coalition forces would clear a city of the terrorists, leave well-trained Iraqi units behind to hold the city, and work with local leaders to build the economic and political infrastructure Iraqis need to live in freedom."
But in Iraq, the deteriorating situation continued on Tuesday when the police headquarters and courthouse in the Iraqi town of Miqdadiya were attacked. At least 18 people were killed and prisoners were released, Iraqi police said.
In Iraq, roadside bomb attacks
continued to claim lives
They said initial reports indicated that 14 policemen were killed at the police headquarters in the town north of Baghdad, and then two bodies were found at the courthouse after guards at the building came under attack.
Two other policemen were killed by a roadside bomb as their unit rushed to Miqdadiya from the nearby town of Baquba to help defend the headquarters, the police said.
They said the attackers, equipped with rocket-propelled grenades, mortars and assault rifles, set fire to the headquarters and badly damaged it.
It was not immediately clear how many prisoners were released.
The attack occurred as Iraq's Shia, Kurdish and Sunni leaders continue to struggle to form a national unity government more than three months after elections.
They remain deadlocked over who will lead the first full-term post-war government three months after democratic polls were meant to fulfill a main goal of the invasion.