Lockyer: California just fine, as long as we issue some fake paper

Lockyer's point when complaining about the possibility of state bankruptcy.
First:

One way to save money, Mr. Lockyer said, would be to refrain from issuing any general obligation bonds until the second half of the year, cutting down borrowing costs.

Second:

“Then, the next option, if you run out of deferrals, is to issue i.o.u.’s,” Mr. Lockyer said. “It’s a possibility. It’s not one that anyone wants to do. It’s at the bottom of the list of choices. But it is on the list.”

The real issue is that guy is stuck in a contradiction, a State which contains his favorite programs and his reputation, but a state near bankruptcy that he was a principle cause. What is the poor guy going to say?