The withdrawal was a painful decision for Sen. McCain (Ariz.), the GOP presidential nominee, who spent nearly $8 million to advertise in the state.

McCain has had to adhere to spending limits because he accepted public funds for his campaign after winning the GOP nomination in September.

“Part of it is they agreed to accept federal matching funds, which capped the money,” said Rep. Fred Upton (R-Mich.), who has served as a regular adviser to McCain.

 “Obama did not. Obama has access to a lot more money than we do,” stated the lawmaker.

Upton, who has backed McCain since the beginning of the primaries, and other lawmakers from battleground states have met with the McCain campaign often to discuss the race.

He received a heads-up from the campaign about its decision to pull out before the news broke Thursday, he stated.

“I understood,” said Upton. “You have to target resources now.”

“They’ve got to focus on states that will take us to 270 rather than take-away states,” he added, referring to the minimum number of electoral votes needed to capture the White House.

Upton said McCain focused on Michigan soon after clinching the nomination because he felt he could steal a state that traditionally has voted for Democratic presidential candidates. McCain believed such a coup would spell disaster for Obama.

“We always knew that, if we won Michigan, it was over for Obama,” said Upton.

Three polls in May showed McCain leading Obama in Michigan.

But Obama’s campaign and its allies also knew the importance of Michigan and made it a high priority.

Karen Ackerman, the political director of the AFL-CIO, told reporters in August that union strategists had made Michigan, Ohio and Pennsylvania their top priorities.

The AFL-CIO conducted a massive effort to introduce Obama as a friend of the working class to union households in Michigan.

Democrats and labor unions have also made it a central part of their strategy to claim that McCain represents a continuation of President Bush’s economic policies. That tack appears to have proved effective in Michigan.

Rep. Thad McCotter (R-Mich.) said McCain was hurt in Michigan by how its economy has fared under the Bush administration.

“We’ve had a very tough economy under Bush and Granholm,” he said in reference to Gov. Jennifer Granholm (D). “In Michigan, the 3rd term of Bush had more resonance than in other states.” Obama began to pull away from McCain in Michigan at the end of September after concerns about the national economy grew louder.

A Detroit Free Press poll at the end of last month gave Obama a 13-point lead.

Rep. Dave Hobson (R), who has represented an Ohio district for 18 years in Congress, said McCain’s lack of traction among working-class voters in Michigan did not mean he would have trouble in neighboring Ohio.

Hobson argued that while both states have large blocs of working-class voters, pro-Democratic unions are much stronger in Michigan.

“I didn’t think we were going to win Michigan anyway,” he said. “Michigan is a different deal [from Ohio]. Unions are much more dominant there. Ohio has a lot more rural population. It’s not as bad off economically as Michigan.”

Democratic nominees John Kerry and Al Gore both carried the state by three and five percentage points in 2004 and 2000, respectively.

Michigan has nearly 10 percent unemployment and Michigan voters have questioned McCain’s support of free trade agreements, which many in the state view as responsible for lost jobs.

Mike DuHaime, McCain’s political director, has told reporters the campaign will shift personnel and resources from Michigan to Pennsylvania and Wisconsin.

Obama’s campaign reported $77.4 million in cash on hand at the end of August. McCain reported $26.9 million in the bank at the same time.