The economy and the war on terror are expected to be the two big issues deciding the November election, and that's why the president was talking up those issues on the campaign trail in California, senior campaign aides said Thursday.

Bush was on a two-day swing through the nation's most populous state, stopping at a Bakersfield company that rents out irrigation equipment. The visit coincided with the launch of a nationwide ad campaign for Bush's re-election that Democrats immediately criticized as insensitive and opportunistic.

The president ignored the critique as he held what the White House calls a "conversation" on the economy with small business owners and employees who support the president's tax cuts and other economic initiatives.

The Bakersfield event came as the Labor Department reported new jobless claims fell last week at a slightly higher rate than was expected. As he does in virtually every one of his speeches, Bush urged lawmakers on Capitol Hill to extend the life of tax relief measures due to expire at the end of this year.

"They need to make the child credit permanent. They need to make the marriage penalty relief permanent. They need to make sure the 10 percent bracket stays permanent. And they need to deal with theAlternative Minimum Tax (search) so these good, hard-working people don't pay more taxes in the year 2005," he said.

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Bush has been careful to give equal attention to California voters across the political spectrum, taking a cue from Arnold Schwarzenegger (search), who triumphed in a special election last October to become governor. In that campaign, Schwarzenegger vowed to govern based on a middle-of-the-road approach that was true to his beliefs and not those of special interests.

Since before his election, the state party has also been active in trying to register new voters, said Jerry Parsky, California chairman for Bush-Cheney '04.

Parsky said the GOP once trailed Democrats in voter registration by as much as 13 percent, but the margin is now only 8 percent, leaving operatives to believe that California is in play this year.

"With Arnold around, it's a totally different ballgame," he said, adding. "The president wants to reach for voters who have not voted before. The president unifies Republicans — perhaps for the first time in California."

Positive Ad Confronted With Scorn

But the Bush campaign has already faced criticism for a new ad launched on Thursday. In the ad, the first in a series to air nationally, Bush is promoted as a steady leader in troubled times, and one whose policies have helped the nation "turn the corner" after the economic recession of 2001 and the Sept. 11, 2001 terror attacks on the United States. The ad also features Bush speaking about getting people back to work.

The ad briefly shows images from the demolished World Trade Center, which has angered some families of victims of the terror attacks who accuse the campaign's use of the images as an attempt to exploit the tragedy for policical gain.

"I would be less offended if he showed a picture of himself in front of the Statue of Liberty," said Tom Roger, whose daughter perished on American Airlines Flight 11. "But to show the horror of 9/11 in the background, that's just some advertising agency's attempt to grab people by the throat."

The campaign of Massachusetts Sen. John Kerry (search), the presumptive Democratic nominee, also immediately denounced the ads as "revisionist history" and said it was "astonishing" that images of Sept. 11 were used in them.

"The only thing steady about this president is his steadily leading our country in the wrong direction," said Kerry spokeswoman Stephanie Cutter. "It's time for a change in America, and time to get things back on track."

But Parsky defended the ad, saying the event defined the country as well as the president's term, and it is a legitimate part of his record for voters to remember.

"September 11 is not just some distant tragedy -- it's a shared experience we all went through together," Bush campaign adviser Karen Hughes (search) told Fox News on Thursday. "I can see why Democrats would like people to forget the strength, resolve and determination our president showed [during that time].

"It's almost inconceivable to me that the next president can't talk about that date."

Analysts said Bush had a right to use Sept. 11 politically.

"To suggest that you cannot make any fleeting reference to an event that not only defined a presidency but defined a way of life … it's just silly," added Fox News contributor Bill Sammon, White House senior correspondent for The Washington Times.

"This is his strong suit, so it's natural the Democrats claim he's using that. He has to make sure he doesn't back away from reminding us of September 11 because that's his strong point."

In addition to reminding voters about Sept. 11, the chief strategist for the Bush-Cheney '04 campaign told Fox News on Wednesday that the campaign will eventually seek to move from purely positive ads to ones that show a sharp contrast in the president's vision for the country with that of Kerry.

Dowd said the campaign is forced to take such action to counter the effect of some "527s" — non-profit groups that are exempt from campaign finance laws and able to raise and spend unlimited amounts of money to elect or defeat candidates as long as they don't coordinate with the political campaigns.

"It's obviously a serious concern that we have, especially these 527s, that are out there, that are supposed to be not coordinated, supposed to be on their own, that they're attacking the president. So we have to deal with that, just as we have to deal with attack ads from the Kerry campaign," said strategist Matthew Dowd.

On Wednesday, Moveon.org (search), a liberal online advocacy group devoted to defeating Bush in November, began running an ad that depicts a factory worker coming home after working overtime as a narrator claims that Bush has urged the elimination of overtime pay for 8 million workers.

Aside from the positive tone of the first Bush-Cheney ad, other campaign ads will underscore the importance of the Latino vote in this campaign. One ad will feature Spanish text and the president speaking in Spanish.

Bush Raises Campaign Cash in California

Back on the campaign trail, Bush has taken to using his usual humor-tinged yet bare-knuckled critique to criticize Kerry's record of so-called "flip-flops."

"He spent two decades in Congress; he's built up quite a record," Bush said to laughter at a cocktail reception Wednesday night. "In fact, Senator Kerry has been in Washington long enough to take both sides on just about every issue."

Saying matters of national security present voters this fall with "the clearest possible choice," Bush picked apart what he said has been Kerry's assertion that the war on terror is "far less of a military operation and far more of an intelligence-gathering, law-enforcement operation."

"I disagree," Bush said.

Bush accused Kerry of wanting to raise taxes, expand the federal government, oppose effective job-creation measures and take control away from Americans.

"He seems to be against every idea that gives Americans more authority, more choices and more control over our own lives," Bush said. "It's the same old Washington mind-set: They'll give the orders, and you will pay the bills."

On Thursday, Bush attended another fund-raiser in Santa Clara that officials say is expected to raise about $700,000, adding to the $800,000 ponied up at a fund-raiser of 600 at the Shrine Auditorium.

At a third fund-raiser during the two-day swing, Bush collected $3.5 million for the Republican National Committee's account. The dinner at the swanky Bel Air and the fine art-bedecked home of A. Jerrold Perenchio, the chairman and chief executive of the Spanish-language media giant Univision (search), featured 150 guests and the personally supervised cooking of famed chef Wolfgang Puck.

In the past nine months, Bush has raised more than $13 million in California, a state he has visited 16 times as president. So far, the Bush-Cheney re-election operation has raised more than $153 million.

From California, Bush was going to his ranch in Crawford, Texas, for a long weekend that will include a visit by Mexican President Vicente Fox (search).

Fox News' Sharon Kehnemui, Liza Porteus and James Rosen contributed to this report.