Well done for your clear analysis, sahilmalhotra01. The big difficulty of this problem is deconstructing the argument and finding the right conclusion. Here's my commentary:
First Statement - Fact - The Department of Homeland Security has proposed new federal requirements for driver’s licenses that would allow them to be used as part of a national identification system - The department has proposed a new requirements.
Yes, this is background / context for the argument. It's a fact that we can't argue with.
Second Statement - first half - Claim/Intermediate Conclusion - Using licenses for purposes not directly related to operating a motor vehicle is un-American - Using licenses for other purposes is un-American.
This is definitely a value judgment - it's giving an opinion - and is therefore a claim. You're right that it could be an intermediate conclusion; we need to read further to find out more.
Second Statement - second half - supporting premise for intermediate conclusion - because it would require U.S. citizens to carry the equivalent of “papers.” - Since, it would require citizens to carry more documents.
Notice the marker word 'because' to show a reason. However, our own logic comes into play here: why is it un-American to carry papers? We need some more evidence to support that claim.
Third Statement - Claim - Such a requirement would allow the government to restrict their movements and activities in the manner of totalitarian regimes - This requirement would restrict the movement of citizens.
And here we have the evidence: if carrying papers means that the government can restrict the movement and activities of its citizens, then it's un-American.
Fourth Statement - Conclusion - In time, this could make other limits on freedom acceptable. - With the passage of time, this restriction could make other limitations acceptable.
Here comes the problematic part: this looks like it could be the conclusion, but it's not. It actually just goes along with with the previous statement that carrying papers is bad news. It's here that I'd encourage you to deploy the 'therefore test' (CR strategy guide chapter 1) to see which statements support each other. You'll notice that the statement 'Using licenses for purposes not directly related to operating a motor vehicle is un-American' doesn't support any other claims in the argument, making it the main conclusion.
Sure, I can hear you say that using licences for ID purposes may lead to other restrictions of freedom, i.e. 'Use licences for ID, therefore less freedom.' But this isn't an argument, it's a
causal link.
Arguments are about claims and evidence, not about one phenomenon causing another. Take this example:
'Tom's shoes are wet, so I think it must be raining outside.' Here my conclusion is 'I think it must be raining outside', supported by the evidence that 'Tom's shoes are wet'. However, this is different from the
causal link: 'It's raining, therefore Tom's shoes are wet.' Be careful not to mix up causes with evidence.