No, that has been put back for two years it seems. This WAS going into effect on 1 Jan but apparently it was felt that too many people still had not received their passports to allow this to occur so they pushed the date of requirement back some. Getting a passport is a good idea especailly in today's world.
If you are cruising to the Caribbean or Mexico you have until December 31, 2007 before you need a passport. Until then your original birth certificate with a raised seal and a photo ID (driver's license) are all you need. Go to this government site for more information.
The time frame was pushed back and the "Official" word is that all travel to and from North America will require a passport by January 1, 2008.
These are the "current" timeframes for implementation now set the by U.S. State Department. The reasons are what Jim had stated. Please, do get the passport. It will be required and is the best identification you can have and is well worth the money spent.
December 31, 2006 – Requirement applied to all air and sea travel to or from Canada, Mexico, Central and South America, the Caribbean, and Bermuda.
December 31, 2007 – Requirement extended to all land border crossings as well as air and sea travel.
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I had just read something about a week ago directly from the state website that they were not needed till 12/31/06 due to them not getting the word out to everyone with in a timely manner. I am going on a cruise in March 06