According to YouTube user Process613, "It's a crazy Jewish song my mother wrote for a children's album, performed live." I don't know what album he's talking about, but if I can find out I'll let you know.
It's good to be Jewish and to have hand puppets. And I like it!
Hat tip to the I Heart Jews blog.
Update: Binyomin Ginzberg of JewishMusician.Com just let me know that "It's Good to be Jewish and I like it" is the title song of a 2006 Paul Zim's album. You can grab a copy from Mostly Music.