Lyric discussion by The Rover 

this song really isnt that hard to figure out. its all about the underground, or "Subterranean" (which dylan took from jack kerouacs book The Subterraneans) culture. its called subterranean homesick blues because dylan misses being part of that underground culture now that he has all this fame. its actually pretty easy to break down the song line by line... for example "Johnnys in the basement mixin up the medicine Im on the pavement thinkin bout the government" johnnys makin lsd in the underground while bobs up top worryin about the government, whos always out to get them for anything they can... "Look out kid its somethin you did, God knows when but youre doin it again." it all adds up... "Maggie comes fleet foot, face full of black soot, talkin that the heat put plants in the bed but the phones tapped anyway maggie says that many say they must bust in early may orders from the DA." come on now thats obvious... she comes running in from the surface to the underground to warn them all that the govt has planted mikes in the bedrooms (a common practice by the feds in the 60s) and that the phones are all tapped (also common) and that they are lookin to make a bust. those that carry round a fire hose? riot police. the plain clothes? undercover cops. just think about the lyrics and it becomes pretty clear.

It's something along those lines but maybe its that he is actually sick of the subterranean culture, homesick for a normal life, if he was playing it straight he wouldn't have to be thinking of the government comin to get him,"man in a coonskin cap in a pig pen" has to go score drugs from this greasy bastard who lives in a pig pen like a slob and its just a pain in the ass cause the guy wants 11 dollars bills but hes only got ten. Maybe he regrets becoming a sort of spokesperson for this underground lifestyle...

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