I'm thick headed and thick-skinned, so it's no big deal. I'm just thinking our loud here, so let's give it a go...
Think about it- we already use SSN for just about all transactions, we have state IDs and DL's, credit cards, debit cards, all that stuff. It's not like we're not IDed to death already. The SSN has become a defacto national ID number, why not just go ahead and create a universal ID, perhaps issued by state of residence? I'm uncomfortable with a Federal ID only because the feds are such lousy beauracrats, and it'd be harder to manage from that level, but they may be able to swing it.
As to the forgery issue, the technology is getting more complex and harder to duplicate. Sure, there will always be fakes, but the average person won't have the know-how, the technology, or the willingness to create the forgeries.
It's impossible to make it perfect, but it would go a long way to helping ID illegal immigrants and others we all want to find and boot out of the country. And to verify who does belong here, including those overstaying student or tourist visas. Along with the ID has to come policies that make having it useful. Just to have it for it's own sake is silly.
What is a better system?