Alan Cole, a senior economist at the Tax Foundation and self-described “tax nerd,” has walked away with a $128,000 profit after betting his entire life savings that Elon Musk‘s Department of Government Efficiency, or DOGE, would fail to cut federal spending.
According to The Wall Street Journal, Cole placed a wager of $342,195.63 on the prediction platform Kalshi, which the Wall Street Journal described as “effectively everything outside of his retirement accounts and home equity.” His bet was straightforward: federal spending would continue its long-standing trend of going up, regardless of Musk’s efforts.
When the official 2025 spending figures were released on February 20, the results were clear. The lowest spending quarter in 2025 came in $66 billion above the bet’s target level, netting Cole $470,300 in total and securing him a 37% return on his initial investment. He will still need to pay capital gains taxes on withdrawn funds and taxes on his winnings.
Federal spending was always going to keep rising, and the numbers proved it
Cole, who identifies as a “normal, conventional Wall Street Journal-reading adult,” saw a clear opportunity in this bet. He knew that cutting spending on areas like interest on the national debt or entitlements such as Social Security and Medicare would be very difficult, especially with America’s aging population.
He also considered this bet to carry lower risk than typical sports bets or other prediction-market wagers. Stories of people fighting legal battles to protect their life savings are a reminder of just how much is at stake when someone puts everything on the line.
Cole also structured his bet carefully, making multiple sub-bets to diversify his risk, ensuring he would at least break even unless spending declined by more than $50 million. His wife, Natalie Lynch, supported the bet after recognizing it was based on objective numbers.
She grew even more confident after reading comments from people on the other side of the bet on the Kalshi website, noting that they didn’t seem to fully understand what they were betting on. Not all financial decisions made within a marriage end well, though; some couples face devastating consequences, like in cases where a spouse drains shared savings during a split.
Other experts agreed with Cole’s thinking. Jessica Riedl, a fellow at the Brookings Institution, said the outcome “should have been completely obvious to anyone who knows anything about the government, the budget and public administration.”
While she believed Cole would win, she did not place a bet herself due to concerns about liquidity, administrative loopholes, and legality. Riedl initially thought Cole had only wagered a “few thousand dollars,” and had a sharp response after learning the real amount. She joked, “Next time I have lunch with him, I know Alan will be picking up the check.”
Published: Feb 26, 2026 01:55 pm