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The lines highlighted in bold were the ones I was wondering about. But it didn't have to necessarily be that he (Dylan) was the "I'm" in the song. I thought it might be that he wrote the lyrics as if speaking for someone else, which of course would still be troublesome *IF* in fact he had intended the song to be about revolutionary terrorist attacks on America, which he almost certainly did not (apparently).

"Johnny's in the basement
Mixing up the medicine
I'm on the pavement
Thinking about the government"

"Maggie comes fleet foot
Face full of black soot
Talkin' that the heat put
Plants in the bed but
The phone's tapped anyway
Maggie says that many say
They must bust in early May
Orders from the D. A.
Look out kid
Don't matter what you did
Walk on your tip toes
Don't try 'No Doz'
Better stay away from those
That carry around a fire hose
Keep a clean nose
Watch the plain clothes
You don't need a weather man
To know which way the wind blows"
http://www.bobdylan.com/songs/subterranean.html