In the TV Series VEEP, why is a spy in the hostage situation a negative thing?

I just started watching VEEP and I was in Season 2, Episode 5 where it was revealed that one of the hostages in Uzbekistan was a spy and it is implied that:

This is somehow bad (as I understand it)
Or maybe it is implied that the President lying about the spy was bad. (I'm guessing this is the actual reason the media is mad)

I don't know which one, so could someone explain that?

If it is #1, then why is it bad to have a spy working for their own government (in the last part of the episode, the Finnish media is asking the VEEP about the CIA spy) as one of the hostages? Doesn't that make intelligence gathering and debriefing easy?

If it is #2, what could the President have done, other than lie? I mean, he can't openly admit on national media that there's a spy in the group of hostages right? The captors would've killed them all immediately.

Either this or I may have missed something. Could someone please elaborate?