If you are in the US, there are no requirements to have a passport for travel within the country. However, if you cross the border, you will need a passport.
"A passport is needed to fly to Mexico, Canada, Central and South America, the Caribbean and Bermuda (as of Jan. 23, 2007).
Homeland Security issued a temporary ruling in June 2007 that allowed air travelers to fly as long as they carried proof that their passports were pending, but that allowance expired Sept. 30, 2007. "