Regardless, it is just a matter of time before the rules change. Anyone who continues to procrastinate about getting a passport is being foolish. Get over the cost and do it.
Just do it.
Don't plan to surprise the family with a cruise based on the hope that a birth certificate and driver's license will cut it. That is simply not a smart thing to do. They'll be mightily surprised if the rules change and suddenly your family is not allowed to board the ship.
Look at my link. I entered "Bahamas", travel "after June 1", "sea" for the mode of travel, and it said I needed either a passport, a passport card, an enhanced driver license, a military ID, a Merchant Marine ID, or some sort of Native American ID. It didn't mention "closed loop". Why take the chance? It is silly to micro-analyze these things and continually come up with "oh DHS says this, and INS says that".
Yes, the Closed Loop
thing is addressed in the link. Want to bet your next pay check on it? And as always, all bets are off if you have to fly home since that already requires a passport (book form).
I have long since become annoyed by this topic cropping up again and again, I am going to close this thread.