But anyway, I mentioned earlier a discussion that Tom Browkaw had on the news last night about this incident. One of the other points he made was that every war in US history was sold to the public with propaganda.

Propaganda is not "lies". Its more accurately described as the appeals to emotion, patriotism, etc.

So I don't think you criminalize Bush's behavior, or consider it somehow aytpical of a president, simply because a member of his staff called it "propaganda," or even if it was, in fact, "propaganda."