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Using sophisticated smuggling networks, the traffickers have transported a portion of the pilfered petroleum across the border to sell to U.S. companies, some of which knew that it was stolen, according to court documents and interviews with American officials involved in an expanding investigation of oil services firms in Texas.

The widespread theft of Mexico’s most vital national resource by criminal organizations represents a costly new front in President Felipe Calderón’s war against the drug cartels, and it shows how the traffickers are rapidly evolving from traditional narcotics smuggling to activities as diverse as oil theft, transport and sales.

Oil theft has been a persistent problem for the state-run Petroleos Mexicanos, or Pemex, but the robbery increased sharply after Calderón launched his war against the cartels shortly after taking office in December 2006. The drug war has claimed more than 16,000 lives and has led the cartels, which rely on drug trafficking for most of their revenue, to branch out into other illegal activities.

Authorities said they have traced much of the oil rustling to the Zetas, a criminal organization founded by former military commandos. Although the Zetas initially served as a protection arm of the powerful Gulf cartel, they now call their own shots and dominate criminal enterprise in the oil-rich states of Veracruz and Tamaulipas.

“The Zetas are a parallel government,” said Eduardo Mendoza Arellano, a federal lawmaker who heads a national committee on energy. “They practically own vast stretches of the pipelines, from the highway to the very door of the oil companies.”

The Zetas earn millions of dollars by “taxing” the oil pipelines — organizing the theft themselves or taking a cut from anyone who does the stealing, according to Mexican authorities. The U.S. Treasury Department this summer designated two Zeta commanders as narcotics “kingpins,” which allows authorities to seize assets.

Federal workers owe more than $3 billion in income taxes they failed to pay in 2008. According to Internal Revenue Service documents, 276,300 federal employees and retirees owe $3,042,200,000.

The IRS tracks the voluntary compliance rate of federal employees and retirees each year, and each year feds come up short. The one bright spot in this year’s report is that after several years of a steady increase, the amount owed by feds is down from the previous year.

Federal employees and retirees owed $3,586,784,725 in unpaid income taxes in 2007.

The documents show delinquent employees from nearly every federal agency with more than 25 employees. Based on percentages, the Department of The Treasury, which includes the IRS, has the best compliance rate. Fewer than 1 percent of Treasury employees didn’t pay their taxes in 2008.

Though the government should hold off on immediate tax hikes and spending cuts to avoid harming the fragile economic recovery, it will need to make such painful changes by 2012 in order to keep debt at a manageable 60 percent of GDP by 2018, according to the Peterson-Pew Commission on Budget Reform.

Without action, investors could lose confidence in the United States, driving down the dollar and forcing up interest rates, said the former lawmakers and budget officials who crafted the report. That could cause a sharp decrease in the country’s standard of living.

“We will be less free if we don’t tackle this,” said Jim Nussle, a Republican member of the commission who earlier served as a White House budget director and chairman of the budget committee in the U.S. House of Representatives.

The 34-member commission published its report as Congress was poised to raise the debt limit from its current $12.1 trillion level to allow the government to continue operating.

The national debt has more than doubled since 2001, thanks to the worst recession since the 1930s, several rounds of tax cuts and wars in Iraq and Afghanistan.

A looming wave of retirements over the coming decade is expected to make the situation worse.

The national debt currently accounts for 53 percent of GDP, up from 41 percent a year ago. That’s likely to rise to 85 percent of GDP by 2018 and 200 percent of GDP by 2038 unless dramatic changes are made, the commission said.

The newspaper identified 16 child-care centers with recent connections to drug operations, and the number is likely much higher. Those 16 alone have collected more than $8.5?million in public subsidies since 2006.

Records show many of those centers have been used to stash and transport drugs, launder dirty cash and provide fake employment for criminals – at taxpayers’ expense.

In an ongoing investigation that has spanned more than a year, the Journal Sentinel has revealed rampant fraud within Wisconsin Shares, the state’s $350?million child-care subsidy program. The investigation has spurred sweeping reforms by lawmakers and regulators, led to more than 130 child-care centers losing public funding and resulted in criminal charges against several providers.

But the problems don’t end with unscrupulous parents and providers teaming up to scam subsidies. In June, the Journal Sentinel reported nearly 500 child-care providers had criminal records – some including felony convictions. This investigation went further. It found the tentacles of some child-care centers also extend into dangerous criminal operations.

In one case, a gunman burst through the door of a home-based child-care business, stuck a gun in the face of an 8-year-old girl and demanded money from the provider. Police believe the invasion was drug-related.

In another instance, police found cocaine, marijuana and cash in a home where children were being cared for by a Sheboygan Falls day care provider whose husband was a suspected drug dealer.

And in yet another, a Milwaukee child-care provider gave $10,000 to her live-in boyfriend, a convicted drug dealer, who used the money to buy 2 kilos of cocaine from an undercover cop in 2007. It is unclear whether the money used for the drug purchase came from Wisconsin Shares. But the woman was paid $39,621 that year by the state through the program.

She was on pace to collect $50,000 this year and remained in business until Friday, when the state yanked her license in anticipation of this story.

“This is astounding – and the government is fostering this,” said state Rep. Mark Gundrum (R-New Berlin), who has introduced legislation to reform the troubled Wisconsin Shares program.

To tell this story, the Journal Sentinel cross-referenced databases containing search warrants and court records with child-care providers. It also reviewed hundreds of pages of police reports, federal indictments, state child-care records, criminal complaints, property records and other public documents. In addition, the newspaper interviewed police officers and prosecutors and relied on tips from child-care center employees and parents.

There is no way to know how widespread the corrupt connections are.

Child-care providers are seldom criminally charged for involvement in drug crimes. Search warrants aimed at drug dealers often make no mention that the dealer’s wife or live-in girlfriend is a child-care provider – even when the day care is the site of the search.

And nobody – not regulators nor law enforcement officials – tracks the overlap.

Yet, cops and prosecutors say they see links between day care providers and drug dealers all the time.

“Probably in 25% of the cases I deal with, there is a wife or girlfriend in the day care business,” said Mario Gonzales, a veteran gang and drug prosecutor with the U.S. attorney’s office.

Regulators, too, see the connections. State records show parents and employees commonly file drug-related complaints about child-care centers. But inspectors rarely substantiate the allegations.

Officials from the Department of Children and Families said Friday they were unaware of the specific drug ties until questioned last week by the Journal Sentinel. On Friday, they revoked the licenses of two of the providers and launched investigations into others.

“We will not accept providers who place children in harm’s way, and if we find out they have, we will shut them down,” said Reggie Bicha, secretary of the department.

The move has anxious moderate Democrats maneuvering to win new deficit-cutting tools as the price for their votes, igniting battles between the House and the Senate and with powerful interest groups on both the right and the left.

The record increase in the so-called debt limit — the legal cap on the amount of money the government can borrow — is likely to be in the neighborhood of $1.8 trillion to $1.9 trillion, House Majority Leader Steny Hoyer, D-Md., said Friday.

That eye-popping figure is making Democrats woozy but is what is needed to make sure they don’t have to vote again before next year’s midterm elections. The government’s total debt has nearly doubled in the past seven years and is expected to exceed the current ceiling of $12.1 trillion before Jan. 1.