Well right now Bush-bashing is hip, and it's one way for people to try and distance themselves from what they see as an unpopular president during a new administration. In general every former President gets a lot of smack talked about them after the fact. For people formerly in goverment to come out and deny this kind of thing lends it too much credibility so it's mostly ignored. Strangely a lot of liberals will believe anything they hear when it's negative for Bush.
That said I personally don't think JK Rowling deserved this award, I don't think she's quite in the same league as other recipients for quality of writing. Harry Potter "means" very little and simply entertains for the most part.
There are also political issues attached to the book especially later on. For example I personally did not care for the entire "Dumbledore is Gay" thing, I felt it should have been left unstated ( if it wasn't just an attempt to grab another headline ). Not due to my general thoughts on gay men or anything, I just fail to see what they has to do with anything in the story or how it really belongs there. I certainly would never have thought of things that way if SOMEONE hadn't come out and said that. Now of course we get to see a children's series totally dragged through slime that is going to hurt it in the long run.
It's odd how often I refer to a humor/shock site (Encyclopedia Dramatica) but in their own way, it sort of makes the point, especially when you see how much material they were able to pull for this. Check out the cartoon/video in paticular:
http://www.encyclopediadramatica.com/Harry_Potter
I think to an extent it became fairly obvious that JK Rowling changed due to success and her attitude during the last few books was entirely differant than the one she started with. Basically the JK Rowling behind the scenes of the last books was NOT the same person who started the series we all fell in love with (including me).
There are plenty of reasons for her not receiving that award, despite it being a very good series that will almost definatly do the multi-generational thing.
Add to this that she's not a US Citizen (I don't think even a dual citizen) and I have to wonder because that is supposed to be an Award for American achievements is it not? Sort of like how Britan has their own.
As far as the encouragement of sorcery, well I wonder how many books receiving the award were magical fantasy/sword and sorcery/etc... I can see this being a factor since awards are always based on opinion and the whole genere is considered very "base".
Plus while I have nothing against Wiccans, and other "modern witches", and their right to do whatever they want, I have increasingly less respect for the institution as a whole and see it and the whole "new age" thing as a bit of a long-running fringe fad, that has been slowly dying as it has become more and more mainstream. Wicca seems to have nothing to do with the JK Rowling Books, but I can see where they might want to avoid it, along with how like back in the 1960s you had people writing all kinds of stuff involving the "benefits" of acid.
Given that Wicca has been fluctuating in popularity since it REALLY started back in like the 1950s, and really hasn't had that much of a cultural impact compared to other things (not saying none, just none that is accepted by the mainstream), if tying the books to this is what Bush meant (even if he would be WRONG) I'd think he'd be right.
Not to mention the fact that in a nation with a seperation of church and state, sorcery/majick/etc... can be viewed as a sort of religion as it has a lot to do with how reality works, and by acknowledging such concepts nationally, even in fiction, he could feel that it sets a bad precedent.
A long ramble based on guesses IF this was real. Truthfully, I very much doubt the book is accurate. All these political "tell all" things are pretty ridiculous, and they are always out there. Obama will get his after his presidency, though his popularity will determine how seriously it's taken. Just take them as a bunch of lulz, and a staffer after his five minutes of fame.