About f-ing time. Of course, exactly what/how it is implemented is critical.
What the government bureaucracies mainly want is a way for individuals to electronically "sign" documents in a legally binding way. The simplest way of doing that requires reliable public-key server...
Let me explain to those who don't already know what I'm talking about. There is a clever cryptographic system which lets someone encrypt something with one code (their private-key), and someone else to decrypt it with a second code (the person's public-key). That setup allows for a lot of cool things, including someone "signing" a document by encrypting it with their private-key if the recipient has their public-key and knows it corresponds to the person signing the document. So there needs to be someplace where you can say "give me Joe Blow's public-key" and you have near certainty that the response will actually be Joe Blow's public-key. Private versions of these servers already exist, but none are particularly widely used.
So why the government (or at least a private entity given special mandate by the government)? Well, quite bluntly, the government has its own law enforcement. I've been proposing for years that the USPS actually do the job, since they have some very particular laws which boil down to "don't fuck with the mail" (IMO they also need to expand their mandate to maintain relevant in the 21st century). The government also has a critical mass of services which really need this sort of system, along with basically universal 'market penetration' (everyone paying taxes at least)... so it has a really good prospect of becoming a standard system to make use of for pretty much everyone.
The really good part of this, assuming it is done reasonably, is that all sorts of other parties can make use of it for online ID verification. Of course, that means that the key-server (aka the entity the government pays to run it) will be able (hopefully not legally) to collect records of who requests each individual's public-key. Other than the info required for initially registering the public-key, that is the only info the server should have.
Of course, this is just the minimalistic sensible approach... I have no clue how they are planning on setting up the actual system. However, assuming that there were some lessons learned from the ACA exchange rollout and fixing it, I'm thinking that the Obama administration might be the least-bad prospect we're going to ever get for setting up this much needed system/resource.
BTW: I expect that medical communications (to comply with HIPPA) and stuff like mortgage documents will very quickly start using this... again, assuming it is done competently. Complying with existing privacy laws is actually quite a pain for them, and this would make it simple. Credit card and other financial institutions/companies should also find it very appealing.