Conservative Economist Scores Big After Betting Almost $350,000 DOGE Would Fail

AP Photo/Jose Luis Magana

Many Americans were skeptical of Elon Musk’s grandiose claims that DOGE would take a “chainsaw” to federal spending. One “tax nerd” was so skeptical he decided to “bet his life savings” on Musk’s promises being a flop — and it paid off big time, according to a report by The Wall Street Journal.

Musk has seen his approval rating descend as he has taken a more publicly active role politically, plus ongoing criticism and litigation over his management of his social media platform X and support for far-right politics in Europe.

He jumped into his work with the Department of Government Efficiency, or DOGE, by waving around a chainsaw on the stage at CPAC in 2025 and then presided over a group of DOGE employees with little to no government experience who fired scores of federal workers, slashed budgets, and eliminated longstanding grants and programs. However, contrary to his promise to save $1 trillion, federal government spending actually went up.

It all seems somewhat predictable in retrospect, but would you have been willing to bet your life savings last year that this would, in fact, happen?

Alan Cole, senior economist at the Tax Foundation, took that bet, telling WSJ reporter Richard Rubin how and why he dropped $342,195.63 into a prediction-market wager on the Kalshi platform.

(Note: the WSJ called this amount Cole’s “life savings” and then later defined it as “effectively everything outside of his retirement accounts and home equity.”)

Describing himself as a a “normal, conventional Wall Street Journal-reading adult” — the WSJ identified him as a “tax nerd” in their headline — Cole said that he looked at the terms of the Kalshi wager and saw an opportunity, because he did not believe anything Musk would do would significantly curtail spending on interest on the national debt or entitlements like Social Security and Medicare, especially as America’s population continued to age.

The bet on the Kalshi site was simply that federal spending would go up, as it long has, and Cole interpreted the risk as lower than a standard sports bet or other prediction-market bets that can be gamed by people with insider knowledge (e.g., how long will President Donald Trump’s State of the Union speech be, whether Lady Gaga would join Bad Bunny’s Super Bowl performance, etc.).

Cole did diversify his risk somewhat, he told the WSJ, making multiple sub-bets so he would at least break even unless spending declined by more than $50 million.

When the federal government released its official 2025 spending figures on Feb. 20, it “wasn’t even close,” wrote Rubin. “The lowest spending quarter in 2025 was $66 billion above the bet’s target level,” netting Cole “$470,300, for a profit of more than $128,000, or 37%.”

Cole still has to pay capital gains taxes on the funds he withdrew from investments and taxes on his winnings.

His wife, Natalie Lynch, told the WSJ she got on board after understanding that the bet would be based on specific objective numbers. “She read comments on the Kalshi website from people on the other side of the bet and grew confident because they didn’t seem to understand what they were buying,” wrote Rubin.

The WSJ report noted that Cole sought advice from other fiscal policy wonks, including Brookings Institution fellow Jessica Riedl, who said the outcome of the bet “should have been completely obvious to anyone who knows anything about the government, the budget and public administration.”

Despite believing Cole would win, Riedl still didn’t make her own bet, saying she was ” nervous about liquidity, administrative loopholes, legality, making sure that I got paid.”

Riedl apparently was under the impression Cole had only bet a “few thousand dollars,” but after Rubin told her Cole had made a six-figure wager, she had a quick retort.

“Next time I have lunch with him,” she said, “I know Alan will be picking up the check.”

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