Trump administration ends Medicare drug subsidy while president announces Gaza disarmament deal

Economic backdrop and GDP revision

Separately, President Trump used a midday appearance to announce what he described as a breakthrough in his administration's Middle East diplomacy. Under his 20-point plan, Israeli forces would withdraw from Gaza, a new technocratic Palestinian government would take power, and an international security force would deploy to the territory.

Rebuilding what Trump and aides described as "the battered Palestinian enclave" would be funded through a coalition of Gulf states, European donors and U.S. reconstruction grants. The plan commits Hamas to relinquishing its weapons caches and dismantling its military infrastructure in phases overseen by outside monitors.

The 20-point plan for Gaza

A senior administration official, speaking on condition of anonymity, said the disarmament timeline would be tied to benchmarks verified by the international security force. The official said remaining hostages would be exchanged for Palestinian prisoners held in Israeli jails, in a step that has not yet been formally negotiated.

The Gaza plan draws on frameworks previously floated by Arab mediators and U.S. special envoys, but it is the first time a sitting U.S. president has publicly conditioned reconstruction aid on Hamas's full disarmament. Critics in Congress from both parties have questioned whether the technocratic government envisioned by the plan would command legitimacy on the ground.

Officials acknowledged that major hurdles remain, including the formation of the technocratic Palestinian government, the deployment of the international security force, and Israel's political calculation about withdrawal. Trump said negotiations would continue "over the coming days" and predicted a final signing within weeks.

Markets reacted modestly to the dual announcements. Pharmaceutical stocks edged lower as analysts priced in the loss of the Medicare subsidy, while defense contractors with ties to Middle East reconstruction saw a small bump. Treasury yields held steady.

The simultaneous rollout of a domestic policy reversal and a high-profile foreign policy gambit underscores the administration's effort to demonstrate momentum on multiple fronts. Whether the Gaza agreement can outlast the statement of intent will depend on the willingness of Hamas, Israel and the proposed international force to commit to the disarmament timetable.

Political and market reaction

White House Chief of Staff Todd Blanche was involved in coordinating the announcements, according to two people familiar with the planning. The administration scheduled the Medicare change for late morning so that the Gaza news would dominate the afternoon news cycle, one of the people said.