Chinese hackers targeted U.S. government emails through Microsoft breach, White House says

Chinese-based hackers gained access to the emails of at least one U.S. federal agency last month through a vulnerability in Microsoft email systems, the Biden administration confirmed Wednesday.

Zoom out: The hack comes weeks after a Russian-linked cybercriminal group also breached networks at U.S. agencies, and as tensions grow between the U.S. and China.

The Cybersecurity and Infrastructure Security Agency and the FBI put out a joint advisory Wednesday announcing that an unnamed federal agency first spotted the suspicious activity in mid-June after noticing Microsoft 365 audit logs were being accessed by licensed users in Exchange Online mailboxes through abnormal programs. The agency then reported the activity to Microsoft and CISA.

Details: The attackers pierced the agency's systems and those of around two dozen other organizations by using forged authentication tokens in a breach first made public by Microsoft on Tuesday night. The Microsoft investigators identified the infiltrators as Storm-0558, a group that primarily uses espionage, credential access and data theft to target government agencies in Western Europe.

“Last month, U.S. government safeguards identified an intrusion in Microsoft’s cloud security, which affected unclassified systems,” White House National Security Council spokesperson Adam Hodge said in a statement Wednesday. “Officials immediately contacted Microsoft to find the source and vulnerability in their cloud service. We continue to hold the procurement providers of the U.S. Government to a high security threshold.”

Targets: The government agencies impacted by the breach were not immediately clear. A spokesperson for the Department of Defense declined to comment on the breach. A spokesperson for CISA declined to elaborate on the advisory, and the FBI did not respond to a request for further comment.

Wang Wenbin, the spokesperson for China's Ministry of Foreign Affairs, did not deny the breach when asked about it during a press conference in Beijing on Wednesday, but accused the U.S. of being "the world's biggest hacking empire and global cyber thief."

"Since last year, cybersecurity institutions from China and elsewhere in the world have issued reports to reveal U.S. government’s cyberattacks against China over the years, but the U.S. has yet to make a response," Wang said. "It is high time that the U.S. explained its cyberattack activities and stopped spreading disinformation to deflect public attention."

The cyberattack came to light just ahead of Lt. Gen. Timothy Haugh’s long-awaited nomination hearing to lead the National Security Agency and U.S. Cyber Command in front of the Senate Intelligence Committee Wednesday afternoon.

Congressional reaction: Senate Intel Committee Chair Mark Warner (D-Va.) said in a statement Wednesday that his committee is “closely monitoring what appears to be a significant cybersecurity breach by Chinese intelligence.”

“It’s clear that the PRC is steadily improving its cyber collection capabilities directed against the U.S. and our allies,” Warner said. “Close coordination between the U.S. government and the private sector will be critical to countering this threat.”

Pattern of attacks: The breach is the latest to hit federal agencies in recent years. Most recently, Russian cybercriminals exploited the file transfer system MOVEit last month in an apparent attempt to steal data from U.S. government agencies and dozens of other groups around the world. The Department of Energy was one of the agencies reportedly impacted by this breach. A spokesperson for DOE did not respond to a request for comment on whether the agency was impacted by the new attack on Microsoft systems.

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5 takeaways from POLITICO’s FAA reauthorization event

Top airline industry officials and Del. Eleanor Holmes Norton said Tuesday that the Federal Aviation Administration faces staffing and funding challenges as travel surges and Congress begins work in earnest on another bill to reauthorize the agency — and that climate change will ultimately play a critical role in the future of air travel.

Here are POLITICO's top takeaways from Tuesday's summit.

Bad weather delays and cancellations will climb as the planet warms.

Weather is by far the largest source of delayed and cancelled flights, and United Airlines CEO Scott Kirby said to expect the increasing frequency and intensity of storms to continue to cause headaches for flights.

"More heat in the atmosphere, thermodynamics 101 — we’re going to have more thunderstorms,” Kirby said.

While individual airlines bear the brunt of irate passengers, and United in particular struggled ahead of the July 4th holiday, the FAA's staffing levels also can play a role in how quickly airlines are able to recover when storms ground flights.

In the New York City area, the FAA's air traffic control facility is staffed at 54 percent of its ideal level. A wave of vacations or sick controllers can contribute to slowdowns at airports because planes are required to leave more space for takeoff and landings when there are fewer controllers on hand.

"Having [air traffic controllers] in the place that they need to be is a big challenge," said Tori Emerson Barnes, the U.S. Travel Association's executive vice president for public affairs and policy. "Even the DOT's IG said their own staffing models were confusing and inadequate."

Do consumer protections stifle innovation?

Airlines and consumer protection groups are generally at odds with how far the FAA and DOT should go to compensate passengers whose flights are disrupted, though the Biden administration is pushing the airlines to do more.

John Breyault, vice president of public policy and telecommunications and fraud at the National Consumers League, said his organization wants the final bill to contain language requiring DOT to ensure that airlines compensate passengers whose flights are delayed — not just canceled.

"Consumers' time is valuable and when it gets wasted through no fault of their own they deserve to be compensated," Breyault said. "That’s already something consumers get when they're flying out of Canada or out of Europe. I think if there was this incentive in place you’d see a lot more focus on hiring to make sure those schedules are resilient when weather happens."

Sterling Wiggins, the Chamber of Commerce's senior director for transportation, infrastructure and supply chain policy, said requiring airlines to hand out more cash for flight issues would discourage airlines from innovating — for example, allowing mobile boarding passes — because they will be on a financial hook for delays.

"We believe that this would have adverse impact on the consumer as well as added a layer of bureaucracy that’s not necessary and could actually result in consumers taking longer to get refunds," Wiggins said.

A proposal to expand long-haul flights at Congress' closest airport continues to be a big problem.

Whether or not to increase the number of long-haul fights out of Ronald Reagan Washington National Airport has split lawmakers in both parties and aspects of the airline industry. Where a lawmaker or interest lands on the issue depends more on geography — and presence already at the airport — than politics.

Norton (D-D.C.) and other Washington-area lawmakers oppose allowing more flights out of Reagan National because the FAA said the airport is already prone to delays and only has one runway suitable for commercial planes. Rather, flights would have to be swapped, meaning a flight to Seattle might replace a flight to Cleveland.

And Norton knocked lawmakers from both parties who want changes, arguing their motivations are driven by self-interest.

"Members of Congress want to be able to fly from their home district to Reagan National Airport," Norton said.

Kirby and United, who has a larger presence at nearby Dulles International Airport, are also opposed to changes.

Delta Air Lines and lawmakers from both parties are pushing for more long haul flights, arguing it would decrease ticket prices at Reagan National and increase access outside of the airport's 1,250 mile perimeter.

The FAA needs more — and more reliable — funding.

Every panelist on Tuesday agreed that the FAA needs more money to invest in infrastructure upgrades, ease staffing challenges and upgrade technology. It's also an area that most members of Congress agree deserves attention, particularly after the nation's air traffic system was ground to a halt earlier this year when a system notifying pilots of potential hazards went down after a contractor snafu.

"We're seeing a failure across the government, not just as it relates to appropriate staffing for air traffic controllers," Barnes said.

"It’s investments in workforce, investments in technology… across the government we’re seeing a challenge that’s hurting the seamless, secure travel experience."

The House bill, H.R. 3935 (118), would authorize approximately $103 billion for the FAA for the next five fiscal years. The bill includes $20 billion for Airport Improvement Program grants, about $17 billion for facilities and equipment and $66.5 billion for operations split over fiscal year 2024 through fiscal year 2028.

The Senate bill, S. 1939 (118), would authorize approximately $107 billion for the FAA for the next five years. The bill includes $20 billion for Airport Improvement Program grants, about $18 billion for facilities and equipment and $67.5 billion for operations split over fiscal year 2024 through fiscal year 2028. Additionally, the Senate bill also includes close to $2 billion for research, engineering and development over five years.

Whether to change the rules on pilot training remains contentious.

Another contentious issue in the two bills are proposals to change commercial pilot training and retirement rules. The House bill currently raises the pilot retirement age from 65 to 67 and includes a change that allows an additional 150 hours of high-gravity simulator time to count toward the existing 1,500 flight hours prospective pilots must accrue. Pilot unions oppose both of those proposals while regional airlines are pushing for the changes, saying they will help get more pilots in the air.

Norton said both proposals are "among the most controversial provisions" though she ultimately voted in favor of the House bill in committee as part of an unanimous vote. The Senate Commerce Committee is still awaiting a markup of their bill after the pilot training issue torpedoed a scheduled markup last month.

Kirby, meanwhile urged lawmakers to keep pilot training changes out of a final bill to keep things moving ahead of the Sept. 30 reauthorization deadline.

"Let's get those things done that we all agree with and talk about those other things in a separate forum," Kirby said, referring to pilot training changes and the slot fight.

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Marjorie Taylor Greene says Freedom Caucus hasn't told her whether she's out

Marjorie Taylor Greene still doesn’t know if she was booted from the House Freedom Caucus, more than two weeks after the group took a vote on her membership.

The Georgia Republican told reporters on Tuesday that she didn’t yet know if she was in or out of the pro-Trump group. She still hasn’t spoken to Freedom Caucus Chair Rep. Scott Perry (R-Pa.) about the vote, she added, which took place late last month, just hours before the House left for a two-week break.

“No one has told me that. As a matter of fact, all the information I found out was from you guys. … I guess Freedom Caucus does a good job of talking to you more than” its members, Greene told reporters at the Capitol.

It’s the latest twist in a very D.C. drama: POLITICO first reported that the group had taken a vote on booting her, though it wasn’t immediately clear if she was officially out. That vote was confirmed last week by Rep. Andy Harris (R-Md.), a member of the executive board, who told reporters that his understanding was that Greene had been removed from the group. It was the first time the Freedom Caucus has voted to remove a member.

A Freedom Caucus spokesperson didn’t immediately respond to a request for comment. But Rep. Ken Buck (R-Colo.), another Freedom Caucus member, told CNN’s Dana Bash on Tuesday that Greene hadn’t answered calls from Perry over the two-week recess and predicted she would be notified this week that she was removed from the group.

After Harris’ comments, Greene released a statement that didn’t address her Freedom Caucus status. She reiterated on Tuesday that she was “here for my district, not a group in Washington.”

“To tell you the truth I’m not concerned about it. I’m here for Georgia’s 14th district. That is who voted for me. That’s who sent me here. And that is who I work for, and I don’t have time for the drama club,” Greene said.

The Freedom Caucus vote to remove Greene took place less than two days after she got into a verbal floor fight with then-fellow member Rep. Lauren Boebert (R-Colo.), during which Greene referred to the Colorado Republican as a “little bitch.” After the exchange was first reported, Greene confirmed the fight and doubled down, adding another pejorative.

The two have clashed repeatedly in the past, but Harris indicated that particular spat had factored into the conservative group’s decision to remove Greene.

In addition to battling with Boebert, Greene has also sparked frustration with some in the group by aligning herself closely with Speaker Kevin McCarthy this year, lining up against many Freedom Caucus members when she supported both his rocky speakership bid and his debt deal with President Joe Biden. At the same time, the group is working through a post-Trump crossroads, with some fretting the group is at risk of becoming too friendly with the party establishment.

Harris indicated that both her support for McCarthy and the debt deal fed into the group’s decision, but “I think the straw that broke the camel’s back was publicly saying things about another member in terms that no one should.”

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Abortion, LGBTQ and race: McCarthy confronts far-right demands on Pentagon policy bill

Speaker Kevin McCarthy's attempts to muscle must-pass Pentagon policy legislation through the House has reached a familiar, tough test: a band of conservatives on the House Rules Committee.

Republican leaders are trying to clear the $886 billion bill through the House this week, no small feat as they navigate a five-seat majority and a group of GOP hardliners who have already threatened McCarthy's speakership. Conservatives want a slew of amendments in the legislation on hot-button policy issues ranging from abortion and LGBTQ troops to artificial intelligence and racial identity.

If any of those changes is included, it risks turning off Democrats who GOP leaders will almost certainly need to pass the National Defense Authorization Act.

The House Rules Committee, with its three conservative wildcard Republicans, is determining in a marathon meeting Tuesday which of those controversial amendments will be debated on the floor. The panel is considering a record number of more than 1,500 amendments, guaranteeing an hourslong hearing that saw warning signs from the very beginning.

"Extreme measures that push domestic culture wars" could threaten the bill's passage, said Massachusetts Rep. Jim McGovern, the top Democrat on the committee. "There could also be serious issues here depending on which amendments are made in order in the final bill.”

The legislation already made it through the House Armed Services Committee in a blowout 58-1 vote. But the panel sidestepped some of the most contentious issues, including Republican efforts to overturn a Pentagon policy that reimburses troops who travel to seek abortions. That panel also dodged proposals such as limiting medical care for transgender troops, rolling back climate change policies and gutting Pentagon diversity and inclusion programs.

Even if the number of potential amendments is limited, McCarthy's problems aren't over. If conservatives are dissatisfied with how many of their amendments GOP leaders allow on the floor, they could mutiny and tank a procedural vote before debate even begins on the bill — blocking it from consideration. But if conservatives are successful at adding their amendments to the bill, many Democrats will be less likely to support the final product.

The Rules Committee hearing is providing the first glimpse into the fight. Rep. Chip Roy (R-Texas), one of the three conservatives McCarthy appointed to the Rules panel as a concession to the right during his fight for the gavel, is primed to oppose the annual defense policy bill — as he has many times before.

“Year after year, Republicans pass an NDAA that propagates the cultural rot at DOD while massive contractors get rich,” he said Monday night ahead of the markup. He said there are “glaring issues at DOD” that the bill would need to address to get his support.

Reps. Thomas Massie (R-Ky.) and Ralph Norman (R-S.C.) also have a history of voting against the NDAA. If the three conservatives vote against advancing the bill in committee, they could doom the legislation. However, the trio has more than two dozen amendments between them that they want to see debated on the floor. The fate of those amendments is likely to determine their support.

House Rules Chair Tom Cole (R-Okla.) said he’s aiming for a “collaborative process."

"I hope and expect that a large number of amendments reflecting ideas from members on both sides of the aisle will receive full and fair consideration on the floor,” Cole said.

House Armed Services Chair Mike Rogers (R-Ala.) made his pitch during the panel hearing to the GOP conference’s right flank where a cohort of lawmakers is skeptical of the NDAA. He touted oversight of Biden-appointed leaders at the Pentagon, measures aimed at addressing cost overruns, evaluation of “national security failures” and elimination of “left wing, divisive” programs.

Rogers underscored that previous bills were bogged down by unrelated issues and urged the Rules panel to grant votes only on proposals that deal with national security.

"The bill before you today includes only provisions squarely within the jurisdiction of the Armed Services Committee," Rogers said. "Whether that policy continues as this bill moves forward is up to y'all."

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Doug Burgum is about to drop hundreds of thousands of dollars on gift cards to qualify for the debate

Want free money? You’re in luck. GOP presidential candidate Doug Burgum has a gift card for you.

The North Dakota governor’s presidential campaign is offering $20 cards to donors who give his campaign as little as $1. It’s a bold and expensive fundraising tactic designed squarely to allow him to hit the donor threshold to qualify for the debate stage — while also raising a new set of legal questions.

The effort — billed in a fundraising text as an attempt to “help ease the burden of Bidenflation” — is a sign of just how unafraid Burgum is to dip into his personal wealth as he seeks the Republican Party’s nomination. It also reflects the difficulties of lesser-known candidates in reaching the Republican National Committee’s donor threshold to qualify for upcoming debates.

The Burgum campaign’s WinRed page indicated gift cards would be available for up to 50,000 donors — enough to make the August debate stage at a cost of $950,000 to the campaign if all donors only gave $1. A donor can only receive one gift card. His campaign said on Twitter that 50,000 people who donated would receive Visa or Mastercard gift cards at their mailing addresses.

The total amount this may cost Burgum in his bid to reach 40,000 donors under the RNC's rules to make the debate stage, along with hitting certain polling requirements and taking a loyalty pledge to support the party’s nominee. But that might not matter to him, since he has an estimated net worth of more than $1 billion and can also self-finance his campaign.

Burgum's team, which hasn't yet disclosed how many donors he has, framed it as a bit of altruism rather than political opportunism.

“Doug knows people are hurting because of Bidenflation and giving Biden Economic Relief Gift Cards is a way to help 50,000 people until Doug is elected President to fix this crazy economy for everyone,” spokesperson Lance Trover said. “It also allows us to secure a spot on the debate stage while avoiding paying more advertising fees to social media platforms who have owners that are hostile to conservatives.”

The scheme also raises some legal questions, and several campaign finance lawyers who spoke with POLITICO had different perspectives on its legality. Paul S. Ryan, a longtime campaign finance and ethics lawyer, said the plan raised concerns that Burgum was effectively acting as a straw donor — a person who makes the contribution in the name of another, which is illegal.

“It sounds like this candidate is using these individuals as straw donors to make it look like he has a bunch of campaign donors when in fact, he’s coaxing these contributions by reimbursing donors out there money that really, at the end of the day, is the candidate’s money,” Ryan said.

Even though Burgum’s campaign finance report would be expected to include the gift cards as expenses, it would not be clear which donors were “legitimate” and which were reimbursed via a gift card, Ryan noted.

But Saurav Ghosh, director of federal campaign finance reform at the Campaign Legal Center, said that the reimbursed offered to donors differed from the typical straw donor context, where the donor is used to conceal the original source of funds.

“Campaigns generally have a tremendous amount of flexibility as far as how they spend their money,” Ghosh said.

Campaigns have long offered non-cash incentives, such as yard signs, books and other merchandise, in exchange for donations. The RNC's donor threshold has pushed lesser-known candidates to get creative with their fundraising pitches in order to land in front of a national audience alongside GOP frontrunners.

Michigan businessperson Perry Johnson, another longshot candidate whose campaign said he surpassed 10,000 donors last week, has been giving away T-shirts supportive of former Fox News personality Tucker Carlson.

For many, hitting the 40,000 threshold could be a steep climb: Former Arkansas Gov. Asa Hutchinson said last week that his campaign had 5,000 contributors so far.

Burgum’s campaign is not the only one pushing for fundraising innovation this cycle. Biotech entrepreneur Vivek Ramaswamy, who said he has already met the RNC’s threshold for the first debate, announced a new fundraising program this week that would give supporters a share of the total donations they raise.

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Ukraine NATO bid still unresolved as alliance leaders gather

Alliance leaders start this two-day summit Tuesday and they still haven't figured out how they'll respond to Ukraine's NATO membership bid.

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Rutgers University to raise costs for tuition fees meals and housing

Rutgers University on Monday approved increasing student tuition and fees by 6 percent each.

The university’s Board of Governors also approved raising meal plans by 7 percent and student housing by 5 percent. That means the typical in-state arts and sciences undergraduate will pay an average of $387 more per semester for tuition, from $6,450 to $6,837. Mandatory fees will increase about $100 per semester for those students, according to the university.

The increases are part of a $5.4 billion budget unanimously approved by the board for the upcoming 2023-24 school year.

The rising costs to students and families follows a large infusion of state aid approved by state lawmakers and Gov. Phil Murphy to help pay for new four-year faculty contracts and other costs. The contracts will cost $184 million over that period, which includes retroactive payments for the 2023 fiscal year that just ended.

Still, the university has been running at a deficit and faces its own rising costs — inflation, salaries and wages, utilities and, it said, “unprecedented increases” for employee benefits such as health insurance premiums and pension contributions. The newest budget lowers the university’s deficit from $125 million to about $77 million, officials said.

“We are committed to providing access to an excellent academic experience and this budget advances that pledge while meeting our financial responsibilities during a very challenging time,” William E. Best, chair of the Rutgers Board of Governors, said in a statement. “We remain equally committed to strengthening financial aid programs that reduce net costs for a majority of our students.”

Rutgers faculty and staff joined a national wave earlier this year when about 9,000 members of three unions walked out for the first time in the university’s 257-year history.

The five-day strike ended after Murphy forced the two sides to more intense negotiations. But ending the impasse also came with the understanding that the state would be asked to shoulder much of the cost.

Murphy and state officials have kept quiet on the exact cost to the state. As part of the budget Murphy signed last Friday, the state will spend an additional $92 million for higher education — aid that goes not only to Rutgers but other colleges and universities, according to Dory Devlin, a Rutgers spokesperson.

Here is how much the annual cost is for the new contracts, according to Devlin:

— $52.89 million in fiscal 23

— $43.69 million in fiscal 24

— $40.48 million in fiscal 25

— $46.92 million in fiscal 26

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