Why not just make a passport that is the size of a DL?
IF you are a citizen you have the passport, if you are not a citizen you have your resident alien card, if you are a tourist or visitor you have the I-94 (or I-94w) card.
Actually, they should make passports larger. That would make it easier to secure them, while limiting them to the few occasions (e.g. voting) where the government has a legitimate need to require a citizen to produce secure ID.