John Kerry (search) said Friday there is a "great potential" for a new military draft to replace overextended U.S. troops in Iraq if President Bush (search) wins a second term, despite Bush's repeated pledges to maintain the all-volunteer service. Republicans rejected the suggestion as "fear mongering."

Bush and his Democratic challenger also sparred over jobs and other domestic issues as they campaigned through battleground states in the Midwest.

At a rally in Milwaukee, Kerry said Bush was "out of ideas, out of touch and unwilling to change" and accused him of mishandling the economy. Bush, campaigning in Cedar Rapids, Iowa, called his rival an unrepentant liberal seeking to hide his record.

Kerry raised the draft (search) issue in an interview in The Des Moines Register published Friday.

"With George Bush, the plan for Iraq is more of the same and the great potential of a draft. Because if we go it alone, I don't know how you do it with the current overextension" of the military, Kerry said.

Bush campaign spokesman Steve Schmidt dismissed Kerry's comments as "fear mongering" and suggested the Massachusetts senator was spreading "false Internet rumors."

Kerry has suggested that Bush's heavy use of National Guard and Reserve troops has created a "backdoor draft." But his latest comments went further.

Bush did not directly respond, but he said in Cedar Rapids that he was "modernizing and transforming our United States military to keep the all-volunteer army an all-volunteer army."

In the second presidential debate, Bush said, "We're not going to have a draft, period." Defense Secretary Donald Rumsfeld has made similar statements.

The latest dispute over the draft came as a survey indicated that military families trust Bush over Kerry as commander in chief by 69 percent to 21 percent. Some 43 percent of the military sample said they were Republicans, 19 percent said they were Democrats and 27 percent independents.

The margin for Bush was smaller, 50-41, among all Americans questioned by the National Annenberg Election Survey.

Kerry focused on the economy as he began a bus tour of Wisconsin, telling a Milwaukee audience that Bush was "out of touch with the average American family" and that his policies on jobs and taxes favor the wealthiest Americans and special interests.

After leaving Iowa, Bush too went to Wisconsin, speaking at a rally in Oshkosh.

Iowa and Wisconsin are among a dozen or so states that both sides deem still in play. Others are Florida, Ohio, New Mexico, Colorado, Nevada, Pennsylvania, New Hampshire, Minnesota, Maine and Michigan.

Both campaigns are polling in those and other states to detect any shift in the post-debate landscape — any opportunity to add or subtract from the battleground. Intrigued by public surveys showing Arkansas and Arizona close, Kerry's pollsters are calling voters in those two GOP-leaning states to see if they merit attention in the homestretch.

Bush has virtually stopped advertising in Washington state and advisers privately concede that Oregon has moved comfortably to Kerry's side of the ledger. The Republican National Committee was considering whether to begin advertising in New York City, one of the nation's most expensive media markets, to reach voters in surprisingly close New Jersey, a Democratic bastion.

Bush's advisers say GOP polling since the debate has shown him gaining ground in key states. Kerry's advisers say their surveys have shown no change, though polls suggest that voters believe he won the three debates.

Meanwhile, Kerry defended his reference to the sexual orientation of Mary Cheney during Wednesday's presidential debate. "It was meant as a very constructive comment, in a positive way," he said in a TV interview.

Both Vice President Dick Cheney and his wife Lynne have rebuked Kerry for referring to their openly gay daughter, and White House spokesman Scott McClellan said Friday the president also "does not believe it was appropriate."

Asked in a TV interview how his comment was constructive, Kerry said, "It's respectful of who she is. And they've embraced her and they love her. I have great respect for them for that. And it seems to me that was the point I was trying to make."

In Milwaukee, Kerry said that Bush "either just doesn't understand...or just doesn't care" about the job losses during his term. Some 821,000 non-farm jobs have disappeared since Bush took office in January 2001, making him the first president since Herbert Hoover to see a net loss of jobs.

"The bottom line is this: This economy has a bad case of the flu and we need a new medicine," Kerry said.

Bush also focused on domestic issues in Iowa, claiming his tax-cuts were fueling a strong recovery and accusing Kerry of favoring "more centralized control and more government...There's a word for that. It's called liberalism."

Polls show Bush and Kerry in close races in both Iowa and Wisconsin, two states that Democrat Al Gore won narrowly four years ago.

Bush and Kerry will launch fresh attacks in coming days. Bush will mock Kerry on his approach to terrorism, particularly his statement that he wants to reduce terrorism to a "nuisance," said Bush campaign communications director Nicolle Devenish. On Thursday, Bush will attack Kerry's health care plans, and throughout his travels, Bush will hammer Kerry's economic agenda, she said.

Kerry will deliver speeches during the next week as his "closing argument" for the campaign. Topics will include Bush's "wrong choices" on the economy, the war on terror and health care, Kerry adviser Mike McCurry said. "You look at President Bush and you see nothing but wrong choices and mistakes that he refuses to acknowledge," McCurry told reporters. "You have to start wondering whether or not there's risk that he will repeat those mistakes over the next four years."