May 11 (Bloomberg) -- At two of the most powerful business lobbies in America, the men in charge must be watching too many Quentin Tarantino movies.

When it comes to global warming legislation, John Engler of the National Association of Manufacturers and Tom Donohue of the U.S. Chamber of Commerce have a “Kill Bill” strategy. Like Uma Thurman snuffing out the title character in Tarantino’s kung fu epic, they want to kill the climate bill, sponsored by Democratic Representatives Henry Waxman of California and Edward Markey of Massachusetts, that would create a cap-and-trade system that sets a mandatory, declining limit on carbon emissions and lets industry buy and sell pollution permits.

To kill her Bill, Thurman used a mysterious martial art called the Five Point Palm Exploding Heart technique; to kill theirs, Engler and Donohue are trying to use hyperbole masquerading as analysis, and the occasional veiled threat.

First they hire economists to produce doomsday forecasts about the impact of climate legislation: millions of lost jobs, gasoline and electricity prices rising so high that they’ll cost each U.S. household thousands of dollars per year.

But these forecasts are cheap special effects. They are based on phony assumptions that ignore the cost-containment mechanisms in the bill and project that America’s transition to clean energy sources will be an utter failure. It’s a pessimistic and cynical exercise that makes for lurid headlines and scary sound bites.

As Engler, the former Michigan governor who now is president of the NAM, said last week: “At their most extreme, these are policies that would plunge America into a permanent recession.”

‘Education Mode’

When I challenged Keith McCoy, the NAM’s vice president of energy policy, on this forecast, he said Engler didn’t have the Waxman-Markey bill in mind. “We haven’t taken an active position on it,” he said. “We’re in education mode.”

Energy-intensive industries do have legitimate concerns about the cost of cap-and-trade, which lets the market put a price on carbon emissions and thus creates a profit motive for developing cleaner energy sources.

It’s not the solution to global warming, but it’s a crucial first step.

Dozens of companies such as General Electric Co., Alcoa Inc., DuPont Co. and Duke Energy Corp. -- influential NAM and Chamber members that also belong to the pro-cap-and-trade U.S. Climate Action Partnership -- are up to their ears in the talks aimed at cushioning consumers and industry from price increases.

School’s Out

But the NAM and the Chamber aren’t taking part in these negotiations. With some of their members still opposing climate action, they cast their lot with Republicans who are doing all they can to scuttle the bill. If the Democrats in Congress move forward with Waxman-Markey, McCoy warned, “they’ll have a lot to answer for.”

So much for education mode.

The Kill Bill strategy worked last year. It may succeed this year. But it’s a loser in the long run. Even if the Waxman- Markey bill dies, the compromises now being hammered out on crucial issues like emissions reduction targets and allowance allocations -- the big-money argument over how many pollution permits are auctioned and how many are given for free to high- carbon industries -- are likely to live on in future bills.

So from a business perspective, this is the time to cut a deal, unless you think that climate legislation can be postponed forever. It can’t and won’t.

Speak for Yourselves

That is why some members of the NAM and the Chamber are pressuring the groups to take a more progressive stance. As Politico reported May 5, Nike, Johnson & Johnson and others recently sent a letter to the Chamber asking it to only issue comments on global warming that “reflect the full range of views, especially those of Chamber members advocating for Congressional action.”

It’s also why Charlotte, North Carolina-based Duke Energy has decided to pull out of the NAM.

“In tough times we want to invest in associations that are pulling in the same direction we are,” Duke Energy Chief Executive Officer James Rogers told me. “The NAM, the Chamber and the Republicans ought to roll up their sleeves and get to work. But quite frankly, I don’t see them changing.” The NAM declined to comment on Duke’s departure.

When you think about it, the trough of a severe slump is the best time for business to negotiate a climate bill.

Buy Low

Just as smart investors buy stocks when there’s blood in the streets, smart business leaders want to cut a deal now. Congress will never be more sensitive to the needs of industry and consumers than it is today. And the longer we wait to get started with emissions reductions, the more difficult and expensive the process will be.

Business groups like the NAM could inject a dose of realism into the debate about cleaning up our energy supply -- a vast undertaking that climate advocates too often soft-pedal. But they would have to drop the doomsday routine and accept the framework of cap and trade. As Duke’s Rogers likes to say, “If you’re not at the table, you’re on the menu.”

Engler and Donohue need to have a frank talk with their recalcitrant members, tuck in their napkins, and pull up a chair.

(Eric Pooley, a former managing editor of Fortune magazine, is writing a book about the politics and economics of climate change. The opinions expressed are his own.)

To contact the writer of this column: Eric Pooley at epooley2@bloomberg.net

Last Updated: May 11, 2009 00:01 EDT