It's a move toward totalitarian system. But that's not the main argument against government to be involved in Internet identity business.

How does the national government issuing identification cards lead to totalitarianism?

Well, if you have a national ID, it's a lot easier to require ID when taking public transit (especially if they have RFID tags: "wave your ID to activate the ticket kiosk!"). That is certainly a step towards, while not necessarily totalitarianism, the sort of police state which I doubt that anyone would want to live in.

The problem isn't that national IDs will cause totalitarianism; they won't. The problem is that they're a step in a direction which a lot of people dislike, towards a government which is monitoring everything we do.

People dislike government monitoring them exactly because it's a step toward totalitarianism.

Nothing prevents public transit to allow people pay with their credit cards or even with driver's licenses. I'm pretty sure that if government works on such payment system -- it would be much more expensive and buggy than best private alternatives.

Besides, government has other things to focus on, such as pulling military out from Iraq and paying out huge government debt. It's not government business to mess with payment system and/or National ID.

Public transit is a product of the government, no?

If it were a private system and the company who owns it required you identify yourself so they can track your movement, would you also be upset?