From the washington post:
[Bush] also amplified an argument made by Defense Secretary Donald H. Rumsfeld on Monday that "the coalition forces can deal with the terrorists now in Iraq, instead of having to deal with those terrorists elsewhere, including the United States." Today, Bush said that fighting terrorists in Iraq and elsewhere means "our people will not have to confront terrorist violence in New York, or St. Louis, or Los Angeles."

FALSE.

I have heard Mr. Bush and his associates say this before and it is just false.
Just because a large number of Islamist extremists itching to fight the US are traveling to Iraq doesn't mean that ALL of them are doing so. I think it's a mighty big stretch to assume all of the awful people who wish us harm are focused on Iraq. I think there are probably a number of awful people who are calculating whether another attack on US civilians would cripple the effort in Iraq. I don't know if that's true or not, but I do know that Mr. Bush's statement is dangerously misleading.
Just because all of our attention is on fighting in Iraq doesn't mean that our enemies are thinking the same way. I am sure there are some who relish Iraq as a distraction to the US... and are busy looking at back doors.