In the past two weeks, the terrorist organization Hamas launched about a thousand ballistic missiles on Israel. Since then, the Iron Dome short-range missile defense system has occupied the front pages of the media.

The system managed to intercept about 300 missiles and evaluated that about additional 700 missiles did not threaten civilian populations or other high-value areas and therefore did not need to be intercepted. This experience confirms that the missile defense criterion of cost effectiveness has been defined too narrowly in the U.S.

For more than three decades, most U.S. decision makers argued that each ballistic missile defense interceptor must be less expensive than an adversary’s missile. In the case of Iron Dome, one Tamir interceptor costs about $50,000, many times more than a Hamas rocket.

Yet this calculation does not take into account the value of the protected area or the costs associated with restoring the area after an incoming missile destroys it. The Iron Dome experience also shows that it is not necessary to shoot down all incoming missiles, but just the ones that threaten what the leadership values.

Beyond physical protection of important assets, Iron Dome provides the Israelis with the space and time to decide on the most appropriate course of action following a ballistic missile attack. Without the missile defense system, Israel could either absorb an attack or conduct retaliatory strikes against its enemies. As The Wall Street Journal sums up, “If missiles were landing willy-nilly in Israeli cities, the pressure would be great either for a ground incursion into Gaza, or a possibly humiliating accommodation with Hamas.”

It is essential that the U.S. support further development of the system. President Obama took an important step when he signed the United States–Israel Enhanced Security Cooperation Act. The House of Representatives version of the National Defense Authorization Act provides $680 million to fund the Iron Dome system over fiscal years (FY) 2012 through 2015.

Such an increase strengthens the Israeli and U.S. deterrence posture and opens up an opportunity for making Iron Dome a joint U.S.–Israeli production program. Such a program would be one of several appropriate ways to advance U.S.–Israeli security interests in the region.

With the exception of the U.S.–Israeli cooperative effort, the U.S. missile defense program has suffered significant setbacks in recent years. The Obama Administration cancelled the Airborne Laser, Multiple Kill Vehicle, and Kinetic Energy Interceptor programs and proposed $1.6 billion in cuts in FY 2010 compared to the prior year’s budget estimate.

The Administration has also virtually ignored the space-based missile defense systems and the threat of short-range ballistic missiles launched off the U.S. coasts from either surface ships or submarines—modes of deployment that U.S. adversaries have tested already. Such an attack could cause an electromagnetic pulse (EMP), which would damage or destroy all electronic devices within the line of sight.

The U.S. should develop tools to protect itself from the ballistic missile threat and a potential EMP attack. As Iron Dome shows, the benefits go beyond protecting civilian lives and property.