I think the latter is likely their primary concern. Certain models making hackers more effective doesn’t change that black hat hacking will still be illegal and that’s always been the prime deterrent against capable hackers.

While there is some fallout likely with much more effective hacking being easily accessible, I’m sure govt analysts (unless they were let go) have their own prediction models telling them it’s inevitable that this technology eventually makes it to everyone they don’t want having it, what with China seemingly releasing every progress they make openly. Which makes me think that they’re preparing for that inevitability by hardening the govt systems currently in place and/or by burying the secrets they want to keep hidden deeper underground.

Given the history of the US and this particular administration, I feel burying things deeper is a greater priority.