It's the Ameicans who want a passport, not the Canadians.
You can get into Canada with valid photo ID, and have your birth certificate handy just in case. You can still drive from Canada to the US with a birth certificate and valid photo ID, however, a passport is encouraged. Flying into the US, I believe you need a passport at all times.
I don't know about flying INTO Canada.
In short, the Canadian gov't lets Americans in with valid photo ID and a birth certificate.
The US gov't requires Canadians to carry a valid passport to get into the US when flying and may still allow Canadian who are driving to get into the US with valid photo ID and a birth certificate.