You can guess who the speaker was referring to. This is a nice congruent conflation of “crazy as a bedbug (or loon)” and “batshit crazy”, both describing someone who is insane. “Bats in the belfry” also come to mind, although that is an old-fashioned phrase. “Crazy like a fox” (clever) might have been in the mix, but I doubt it based on the person the speaker was referring to. Hint: he denigrates war heroes, and even when they’re dead.
This one was uttered by J.C. Watts on the MTP (Meet the Press) Daily show on MSNBC. It is a nice mash up of “crazy as a loon” (insane) and “phony (or queer) as a three dollar bill” (bogus). http://www.zajilspeed.com/2017/08/african-american-republicans-tried-to.html
I suppose a three dollar bill is pretty crazy, but those loons definitely are the craziest. Of course, pileated woodpeckers sound daffy as well. A big thanks to Chief Malaphor Hunter (CMH) Mike Kovacs for hearing this one and immediately recording it.