I think that song was supposed to be some kind of commentary on Dylan's writer's block at the time. Self-Portrait was a cover album by and large, and some theorize that he did this either because he had writer's block or because his manager was ripping him off and he wanted to get out of his contract. Either way, I think "tired horses" might refer to Dylan's songs that by this time were overplayed and stale to him. He was sick of celebrity at the time and just didn't feel like writing. That's what I think, anyway.
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