LE at Happy Girl & Atlantis
The only time that a cop can compel you to hand over your Drivers' License is when you are driving.
Most other times, my response is (and has been once), "Sure, I will give you my Drivers License, but you have to arrest me first. Then we are going to court, because if you don't have the balls to follow it through, I get my lawyer and find a way to sue you - wrongfull arrest or harrassment perhaps." It worked.
The only exception will be (as I said above) if I am driving or if I think that the cop has a weak case but can cause trouble for me even if he loses. I will then try to negotiate the terms under which he can see my license.
Whups, one more thing. If a real crime (someone's been assaulted or stolen from etc.) has occurred I will do whatever I can to assist (I have served on a jury several time and been a foreman) and I have a great respect for the police in this capacity. They are only pigs when they poke their noses in stuff that is not there business - sex, drugs etc.).
I am looking forward to the day when I can tell a judge, "I cannot in good conscience send a person to jail for doing what is his own business and not the state's."