Last Thursday, Senator Barack Obama announced that he was passing up $84 million of taxpayer money to finance his presidential campaign, choosing instead to raise his own funds. Sounds pretty noble, right? Not according to his opponent, Senator John McCain. In fact, Obama's decision to opt out of the public-financing system was met with a firestorm of negative response, and not just from Republicans. So what does all this money talk really mean?

By refusing federal money, Obama avoids the strict spending limits imposed on publicly funded candidates. Since the 1970s, the government has offered all major-party presidential candidates taxpayer money for their campaigns. In return, the candidates must agree not to seek or spend private donations to cover campaign expenses. Moreover, they must agree to state expenditure limits, based on the number of voters in each locality.

The public campaign-financing system, instituted after the Watergate scandal surrounding Richard Nixon, is intended to make presidential elections less corrupt and politicians less beholden to individual donors. Candidates who choose to participate in this system must rely on federal dollars alone to bankroll their travel expenses, TV ads and the like.

McCain has accepted the public funding offered to him, as well as the spending limits that accompany it. Meanwhile, Obama is free to spend as much as he wants on his presidential bid, making this election cycle likely to be the most expensive ever.

The decision made sense for Obama. The Democratic candidate has proven to be a record-setting fundraiser, generating over $265 million during primary season alone. Even with campaign contribution limits, he should be able to raise significantly more than the $84 million promised to his Republican counterpart. This extra cash means that the Obama campaign will be able to challenge McCain in traditionally red states, a strategy usually considered too expensive for Democrats constrained by spending limits.

The McCain campaign has questioned Obama's trustworthiness on the basis of this decision, alleging it "should be disturbing to all Americans." In 2007, Obama pledged to participate in the public-financing system and forgo private fundraising if his opponent agreed to do the same. Critics contend that the Democrat flip-flopped on the issue for political gain. According to McCain's communications director, Obama failed to "stand on principle and keep his word to the American people," thereby making him "just another typical politician."

The Obama camp disagrees. In an e-mail message to supporters, he called the public-financing system fundamentally "broken," because it permits special-interest groups to "drown out the voices of the American people." Obama contends that Republicans have become masters at manipulating the system, taking advantage of the Republican National Committee and political advocacy groups, which are not subject to the same spending constraints as the candidates themselves. Remember those "Swift Boat" ads aimed at John Kerry in 2004? They were funded by the type of groups Obama is talking about. He alleges that his opponent is "not going to stop the smears and attacks" from independent groups who spend millions on issue ads and that he needs more money to combat the Republican machine.

Furthermore, Obama has characterized his grassroots fundraising campaign — the first to rely primarily on the Internet to collect small donations from numerous contributors — as more reflective of a new kind of politics, one that does not favor the wealthy and powerful.

For now, the McCain camp will probably continue to attack Obama for breaking his word on public financing. The degree to which the presumptive Democratic nominee's decision will affect the election, however, is unclear. Look for the Obama campaign to try more innovative strategies for fundraising, making use of the Internet to tap potential donors. And watch out for those political ads in surprising places (here on MTV, for example), because both candidates will be reaching out to young voters more than ever before.