While many Americans cannot correctly pronounce it (or know that there is a different pronunciation), the word chutzpah is absolutely part of the English language today. Like schlep, maven, and klutz, this Yiddish word has been adopted by America.
Chutzpah is audacity and insolence. It's generally not a nice word to apply to someone.
So what was the issue last week? Michelle Bachmann hilariously mispronounced chutzpah as "choot-SPA." Chutzpah's "ch" is not pronounced like "choo choo." It is a guttral sound, but if you can't pronounce that, the plain "h" sound is permissible. The stress should be on the first syllable.
Here is the offending video:
As Jon Stewart said, "You know...I got a feeling that saying the word 'choot-spa' is going to hurt more grandmothers than Obama cutting off their Social Security. I think both parties have already lost Florida."