Does anyone know why and what I can do to prevent my bottom layer cake from buldging once I put the other tiers on top? The fondant seems find but as soon as I put another tier on top of it the fondant starts to buldge!!!! I am doweling it just like I am supposed to so I don't know what I am doing wrong!

If the top layers are not doing this, then I suspect your dowels are too short, and allowing the heavy tiers above the bottom cake to put pressure on the bottom cake. The bottom cake (all of them for that matter) should not have any weight or pressure whatsoever. That cake, if it had a brain shouldn't know there was anything on top of it. The cakes rest entirely on the dowels...ah, I think you get it. I have a feeling that that is your problem.

So should the dowels actually be a little taller than than the cake tier that they are inserted into?

Ever so slightly, yes. I use a sewing ruler, just like Sugarshack promotes on her website, and I use that to gauge the height of my straws, when I'm not using SPS (that's for you Leahs ). I slide that thing down to the very top of the icing, and when I take it out, bump it up another 1/16th of an inch, actually less than that. If you are going to put a ribbon border, fondant ribbon, piping, what evere, you would never know the space is even there. Pretty much invisible.

Ideally, the cakes should all touch, but no pressure at all....all weight completely, 100% supported by dowels/straws/SPS, whatever you are using. Mine are usually pretty close, but never squishing on top of each other causing bulging or cracking.