If a university pay walls a single paper or article they produce from the public they should immediately be stripped of all of their public funding. I can't think of a single reason why the public is forced to pay taxes to them if the only way they are able to see a benefit from it is by proxy of someone who is paying money to attend or someone spending their private money to access the information.
In the US, federally funded research is already required to made available without paywalls within 1 year of publication. Open-access advocates online generally seem to be unaware of this, and that current goalposts are therefore (a) immediate open access, and (b) open-access publication of all scientific research regardless of funding source.
I didn't know this thanks for the information. There is probably an opportunity for some projects to enable exploration and discovery to be more intuitive - I think your second bullet is something where the distinction is not always obvious and leads to misunderstanding (at least for me).
I'm a proponent of affordable open access. I think that work produced using even a penny of federal grant money should only be published in open access venues where publication fees (including eg mandatory conference attendance) are capped at $500. (In particular, these means a permanent remote attendance option at all CS conference... no more "good work doesn't get published because the author is at a community college and can't afford a one week European beach resort vacation".)
The opinion expressed in the parent comment is (perhaps unwittingly) extreme and doesn't even solve the problem.
First, the "no paywalls" solution does not even solve the problem! What happens in practice is that publishers shift the cost from the reader to the author by charging MASSIVE open access fees to publish. The taxpayer gets screwed by the publisher on the front-end instead of the back-end. Any solution needs hard upper limits on the cost of publishing.
Second, open access requirements should be scoped to work paid for with public funds. Professors should be allowed to write books and publish them through the university press as long as they do the work on their own time (or the university's time). Graduate students should be allowed to do off-hours consulting work to make ends meet during their PhD studies.