Obama said the United States will support provincial and district level government and specific ministries, such as those devoted to Afghan security, instead of just sending funds to Karzai's central government.
"Investments will be based on performance," the senior administration official said. "The era of the blank check for President Karzai is over."
And if Afghanistan's president continues to run a government that is full of corruption and fails to provide basic services, he may find himself out of the loop entirely.
At around 10 p.m. Monday, Obama held an hour-long video conference call with Karzai, whose office said the two leaders discussed in detail the security, political, military and economic aspects of the administration's strategy.
Skeptics, Republicans and Democrats alike, have said they are not convinced Obama's strategy will work and the White House has faced many questions about how it would pay for this surge in resources in Afghanistan.
Tonight the president said this new approach would cost $30 billion this year. He said he would work with Congress to address that cost and stressed that is why his plan for the troop commitment cannot be open-ended.
"The nation that I am most interested in building is our own," Obama said.
Today, House Majority Leader Steny Hoyer, D-Md., told reporters there is great reservation in the caucus about any acceleration of U.S. efforts in Afghanistan, but added that he will withhold judgment until he hears from the president.
"Thirty-five thousand more troops is a big deal and it's going to be 35,000 times harder to extricate them from all this," said Rep. Jim McGovern, D-Mass.
Liberal advocacy group Moveon.org sent an e-mail to its members today, urging them to call the White House and "Tell the president that we want him to focus on bringing our troops home, not escalating our involvement in Afghanistan."
One Democratic lawmaker has even suggested a new tax be imposed on Americans to fund the costs of additional troops. Gibbs said the president understands this is an expensive endeavor, but the administration will make sure it's part of the budget.
"Look, going forward, the president is not going to make a national security decision simply based on money alone," the press secretary said. "We're going to make sure this is part of our budget and we understand that going forward, we have to pay for this kind of stuff."
On the GOP front, Sen. John McCain, R-Ariz., the ranking Republican on the Senate Armed Services Committee, said he would be concerned if Obama lays out too strict a timeline for withdrawing American combat troops from Afghanistan.
"I have deep concerns about setting a date certain for withdrawal," McCain, who has long supported an infusion of combat troops in Afghanistan, told reporters today. "Success is what causes us to withdraw. You don't want to tell the enemy that you're coming or when you're leaving."
In an interview with Politico, former Vice President Dick Cheney said the president's approach projects "weakness" and that the average Afghan citizen "sees talk about exit strategies and how soon we can get out, instead of talk about how we win."
"Those folks ... begin to look for ways to accommodate their enemies," Cheney said. "They're worried the United States isn't going to be there much longer and the bad guys are."