The latter seems fairly stupid--I'm not sure if it didn't occur to them that small towns and cities would be a better idea, or if by the time it was clear that people were aggregating around big cities, the nuclear war thing had been forgotten, or if no one can figure out a way, even with the Feds leaning on it, to get people to live in small towns and cities. Or maybe the idea was to get people out of city centers, without much thought about where they'd decide to live instead. I leave open the possibility that encouraging people to move into the suburbs had some other purpose, though.
In any case, the article recommends looking for Federal solutions to the problem, which sounds rather risky--the whole point of Federal solutions is that they can override individual judgement on a large scale. Any suggestions for how the Feds could withdraw from that arena in a sensible way?