Leo Rosten's Joy of Yiddish notes that p*tz is one of the most highly offensive of yiddish words, distinctly more offensive than schmuck. *Roston is not available on the net, but
http://mat.gsia.cmu.edu/POB/AUG3198/0539.html provides a paraphrase.

Incumbent New York Senator Alfonse D'Amato called his opponent a "p*tz" during his 1998 reelection campaign. When D'Amato later tried to allay controversey by downplaying the offensiveness of the word, the New York Time cited Rosten in refutation. D'Amato lost the election.

Abstracts from the Times Website:
October 22, 1998 - Repr Charles E Schumer ... berates D'Amato for disparaging him with Yiddish vulgarism October 23, 1998 - D'Amato ... refuses to back away from his use of Yiddish vulgarism to describe his opponent, Repr Charles E Schumer; several prominent Democrats, including former Gov Mario Cuomo, join Schumer in criticizing D'Amato's recent personal attacks; October 24, 1998 - Schumer releases new television advertisement ... : unedited news footage in which he [D'Amato] repeatedly denies that he ever insulted Schumer with Yiddish vulgarism; D'Amato acknowledged making comment only after his own supporters said they had heard him make it