The Senate Finance Committee is expected to act swiftly on the nomination. The panel's chairman, Sen. Chuck Grassley, R-Iowa, said he would schedule a hearing soon.

Sen. Max Baucus (news, bio, voting record) of Montana, the panel's highest-ranking Democrat, called Paulson an outstanding choice and said the administration could benefit by "taking Hank's expert advice and restoring Treasury's central role as the economic policy driver in the executive branch."

Another Democrat, Chuck Schumer of New York, said Paulson was "the best pick America could have hoped for."

The nomination process, however, is likely to throw a fresh light on the chasm between Democrats and Republicans over the president's economic policies.

Republicans credit the president's tax cuts for helping cushion the blow of the 2001 recession. Democrats say the tax cuts mainly helped the wealthy and plunged the government's balance sheets deeper into red ink.

"Mr. Paulson will face many challenges ... in steering our economy toward greater prosperity for all Americans," said Senate Democratic leader Harry Reid of Nevada.

Speculation that Paulson would take over from Snow increased after Joshua Bolten, a former Goldman Sachs executive who had worked with Paulson and was leading the effort to find a replacement, became the new White House chief of staff.

Snow, meanwhile, plans to attend the June 9-10 meeting in Russia of finance ministers from the Group of Eight major industrial countries. That meeting will help prepare the agenda for this year's G-8 summit which is being held in July in St. Petersburg.

A loyal lieutenant in Bush's economic team, Snow has traveled around the country promoting, among other things, Social Security changes and an overhaul of the tax code. His standing, however, suffered as both proposals stalled.

Handing off the baton, Snow said of Paulson: "He's an old friend, somebody I've admired and respected and worked with over the years. ... Hank will be a great addition to your administration."