As House leaders unveiled legislation for an unprecedented $825 billion economic stimulus, UC Berkeley economist Christina Romer said she never dreamed that her scholarship on the Great Depression would be useful in formulating current economic policy.

But giving her strong endorsement to the history-making package, Romer, President-elect Barack Obama's nominee to be head of his Council of Economic Advisers, said at her Senate confirmation hearing Thursday that her chief task will be to "ensure that the tragedy of the 1930s is not repeated."

The stimulus package, consisting of $550 billion in new federal spending and $275 billion in tax cuts over two years, was developed by congressional Democrats in coordination with Obama transition officials. Republicans complained they were shut out of the process despite personal promises from Obama that their ideas were welcome.

The stimulus plan is a veritable dream list of projects that Democrats, and some Republicans, feel have been delayed too long. Democratic leaders cast the package as immediate relief to struggling families and the start of a longer-term investment in building a "21st century economy."

Obama said the American Recovery and Reinvestment Plan will save or create more than 3 million jobs "and make America strong and competitive in the 21st century." He described the plan as a "significant down payment on our most urgent challenges" and promised "it will contain the kind of strict, independent oversight that will allow the American people to hold Washington accountable for how and where their tax dollars are spent."

Romer, a renowned macroeconomist whose confirmation is expected to fly through the Senate as early as next week, was joined by her husband, David, also a Berkeley economist, her father and her youngest son, Matthew, 12.

She endorsed the tax cuts, which are expected to lure GOP support, as well as the huge increase in government spending. Such an enormous fiscal stimulus "was not really tried" during the Great Depression, despite conventional wisdom surrounding President Franklin Roosevelt's New Deal, mainly because states simultaneously cut their spending, Romer said. In addition, President Herbert Hoover had raised taxes in a mistaken effort to keep the budget in balance.

Romer said the new spending, which polls find enjoys overwhelming public support, will be aimed not just at short-term job creation but also at public investments in infrastructure, education and other areas to improve U.S. competitiveness. "If we have to spend all this money, let's make sure we get the long-term dividends," she said.

She also warned the Banking Committee that the $350 billion second installment of the deeply unpopular $700 billion bank rescue was vital to keeping the financial system functioning. In recent days, Bank of America and other large institutions indicated they will need more capital injections. "The connection of the financial system and the economy is crucial," Romer said. "If we let the financial system go under, it won't just be a catastrophe for Wall Street, it will be a catastrophe for every one of us."

Democrats have the stimulus plan on a fast track for Obama's signature by mid-February. Billions would go to beleaguered states such as California to prevent cuts in state spending. Each worker would get a $500 tax credit; $39 billion would go to subsidize health care insurance for unemployed workers.

More billions would go to education, science and research and expanded broadband Internet access. More than $30 billion would be spent to upgrade the nation's electric grid to ease transmission of wind, solar and other alternative power. A welter of tax credits is aimed at spurring alternative energy production and conservation. Another $20 billion would be spent computerizing medical records.

Democrats insisted there would be no earmarks for members' pet projects of the type that proliferated by the tens of thousands when Republicans controlled Congress and the White House. Obama has repeatedly promised that every line of spending will be completely transparent.

"Oh, my God," said House Republican leader John Boehner, R-Ohio. "It appears my Democratic colleagues think they can borrow and spend their way back to prosperity." Conservative groups such as the Heritage Foundation and conservative budget watchdog groups immediately attacked the plan as a boondoggle and will attack it piece by piece in the coming weeks.

But other groups, which are seeing federal dollars flow to areas they said have languished during the Bush administration, were jubilant.

"These proposed investments in research, in students and in infrastructure will not only create jobs right away but also jump-start the nation's effort to produce more of the people, ideas and technologies that will help build a foundation for energy security, a cleaner environment and ultimately a sustainable prosperity," said Robert Berdahl, president of the Association of American Universities.

Technology industry groups similarly lavished praise on the effort. Silicon Valley has bet heavily on green energy as the next advance in technology but, with the collapse in oil prices, needs government aid to keep such projects alive.

For House Speaker Nancy Pelosi of San Francisco, the giant stimulus package is the first step into Democratic rule in Washington and a showcase for ideas she and others have seen thwarted during the last decade and a half of GOP control of the White House or Congress.

"It is pretty exciting," Pelosi said.

The stimulus carries political and economic risks. It may not work, and comes as U.S. debt levels are rising rapidly. With trade and the entire global economy in a sharp downturn, and many governments spending heavily on their own stimulus efforts, borrowing may become more difficult.