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This report provides background information and issues for Congress on the Aegis ballistic missile defense (BMD) program, which is carried out by the Missile Defense Agency (MDA) and the Navy, and gives Navy Aegis cruisers and destroyers a capability for conducting BMD operations Issues for Congress concerning the Aegis BMD program include demands for BMD capable Aegis ships, demands for Aegis ships in general, the U.S. economic impact of shifting four Aegis ships to Rota, Spain, U.S. vs. European naval contributions to European BMD, the capability of the SM-3 Block IIB Aegis BMD interceptor, and technical risk in the Aegis program.

This report focuses on how the Budget Control Act of 2011 (BCA) will affect spending and the budget deficit through the "first round" effects, related to discretionary spending caps and student loan provisions, and the "second round" effects of additional deficit reduction, related to the work of the Joint Committee. The report also examines short and long run effects of deficit reduction on the economy.