FED AGENCIES DOING THE TAX-CUT SHUFFLE

Four federal agencies are bracing to hack away at their own budgets to fund the Administration's $50 billion middle-class tax cut, the cornerstone of the critical nationally televised address President Clinton is set to deliver Thursday night. Administration officials names the departments of Energy, Transportation, Housing and Urban Development, and Health and Human Services. All four were considered for complete elimination, but were spared after their heads agreed to severe budget cuts. HUD, for instance, may be trimmed by selling off some of its public housing stock and making the Federal Housing Administration, which guarantees mortgages, an independent agency. The DOE was saved only after Secretary Hazel O'Leary agreed to slash $22 billion over five years from her budget, which this year totals $18.5 billion. Officials spent the day in a flurry of Cabinet-level meetings and it's likely "that nothing's been decided yet," says TIME White House correspondent Adam Zagorin. "In fact right up until the delivery of the speech the president will be deciding."Even as the agencies quaked, analysts criticized Clinton's decision to give the middle class a tax break -- fearing that it would lead to higher deficits and inflation rates -- at a time when the economy is thriving. "Talk of a tax cut now is like throwing gasoline on a burning fire," said Sung Won Sohn, chief economist at Norwest Corp. in Minneapolis. Tax cuts are usually adopted to jump-start a sluggish economy, but, notes TIME's Zagorin, "this is not an economic decision it's a political one."