Government is bad for the economy, except when it isn't

Via Krugman, a great quote from the estimable Barney Frank:

We have a very odd economic philosophy in Washington: It’s called weaponized Keynesianism. It is the view that the government does not create jobs when it funds the building of bridges or important research or retrains workers, but when it builds airplanes that are never going to be used in combat, that is of course economic salvation.

Well put, as usual. Even forgetting the public goods idea (which should never be forgotten), it's absurd to believe that defense spending boosts the economy but that stimulus spending doesn't. Nevertheless, that is apparently what many Republicans (and not a few Democrats) appear to believe.

On a semi-related topic, last night I watched Obama's Q&A session on health care. By far the most common question that came up was some variant of "Won't a government-provided plan be inefficient?" I highly doubt these questioners were dyed-in-the-wool libertarians who think everything in the nation should be privatized. They want their government-provided roads, their government-provided military, their public schools, their police and prisons. They have no trouble believing that the government, not the private sector, is the best provider of everything that our government already provides. But when it comes to things that the private sector currently provides, they suddenly switch into libertarian mode - suddenly, government is inefficient and meddlesome and scary. It's like they believe that our current boundary between public and private is the best, the most optimal, the most perfect, now and forever. We are apparently perched on the optimum peak of public goods provision, and any step in either direction will tip us into socialism or anarchy.

What dark magic has made my countrymen believe such silly things?