Decision to choose ultra-conservative Tea Party hero will offer voters a stark choice from Barack Obama's fiscal politics
Mitt Romney announced as his vice-presidential running mate Paul Ryan, a Congressman who established his reputation with a Tea Party-infused plan for massive debt cuts.
The choice of Ryan ends months of speculation that he might choose a woman or a Latino as his running mate.
Instead, he has opted for a relatively young, ultra-conservative politician who will be popular with the Republican base.
Ryan's choice will help define the White House race, offering a stark choice between Barack Obama's push for spending to help speed America out of recession and a Romney-Ryan ticket committed to huge cuts in federal spending, especially welfare.
Romney, introducing Ryan at a campaign event in Norfolk, Virginia on Saturday, had a minor gaffe, describing him as the "next president of the United States". He acknowledged his mistake and reintroduced him as the next vice-president.
Romney made the choice after returning from a trip to England, Israel and Poland a fortnight ago. He phoned others on the shortlist on Friday night.
Democrats welcomed the prospect of Ryan because his $5.3tn plan to reduce debt over a decade gives them scope to win over the targets of those cuts: the elderly on Medicare, the poor on welfare programmes, students and others.
The Obama campaign said Romney and Ryan also share a commitment to 'budget-busting tax cuts' for the wealthy.
Jim Messina, the Obama campaign manager, said the Republican ticket would return the nation to "reckless Bush economic policies that exploded our deficit and crashed our economy" and end Medicare.
The prospect of changes to Medicare could have a potent effect on the election. When Ryan first proposed it, there was backlash from its main beneficiaries, those aged 65 and over, worried over the prospect of losing their cover.
Bill Burton, a former White House staffer and founder of a leading Obama Super Pac, tweeted that "Romney picked one of the only people who could have had an impact in the race. But, not the way he wants."
Ryan's speech was dominated almost entirely by an attack on Obama's economic record. "We find ourselves in a nation facing debt, doubt and despair. This is the worst economic recovery in 70 years," he said.
"Unemployment has been above eight percent for more than three years, the longest run since the Great Depression."
The Romney campaign will come under pressure to explain how the Romney-Ryan team will implement a massive debt-cutting programme and cut taxes, as Romney has promised.
Speculation about a vice-presidential running mate focused on a shortlist that included former Minnesota governor Tim Pawlenty and senator Rob Portman.
Others included senator Marco Rubio, in the hope that he might help bring over Latino voters, and the boisterous governor of New Jersey Chris Christie.
Wild cards included former secretary of state Condoleezza Rice and general David Petraeus.
Obama and Romney have been running almost neck-and-neck in the polls for months, though Obama has opened up a small lead over the last week after a sustained attack on Romney's record as chairman of Bain Capital and a controversial ad linking Bain to a woman who died from cancer after her husband lost his job and health benefits.
Romney, in his speech Saturday, referred to the Obama campaign hitting "a new low".
The choice of running mate does not normally matter, apart from controversial choices such as Sarah Palin.
The vice-presidential candidate, after an initial flurry of interest, tends to retreat to the shadows, apart from his vice-presidential debate in the autumn. But Ryan looks as if he is going to have a bigger than usual impact.
Ryan's debt-reduction plan will be picked over in the coming weeks by the Obama campaign.
One of the most controversial parts of his package is to curb Medicare, the health insurance programme for Americans over 64, and that could play into Democratic hands.
He also proposes cutting Medicaid, the modest health safety-net for the poor, and other welfare programmes.
Among Ryan's champions have been the ultra-conservative editorial team on the Wall Street Journal, who have been arguing that he has defined the debate about the role of government and how to turn America into a growth economy.