They are in big trouble. Bush's speeches, even as late as December, managed to shore up public opinion a little bit. But what you can do with speeches at this point is pretty limited. It's not even clear who's listening.
For Bush, what's at stake is the ability to push ahead with this new plan to rally the public. He's had a series of speeches which have framed the Iraq issue in a way that is likely to prop up support some, but the election is his chance to connect that to real events.