Well that is the reason for his freefall. Out of control social spending really bothered a lot of his base but we've given him a pass on it for a while. The tax cut was a good first step but they are only temporary and really insignificant in the grand scheme - tax reform is really what it needed.
Bush's base gave him a pass because he seemed to be doing a good job after 9/11 but even that is becoming a little doubtful now.
Miers was the first thing to really hurt his support with the party, followed by the ports deal and then his encouragement of illegal immigration during the takeover of the streets by foreign nationals was the last straw for many.
The only way Bush recovers is if the democrats do something really stupid which certainly isn't unlikely.
You've made some good points for which you'll have hell to pay from the resident Bush groupies.