Schmuck is supposedly an obscene Yiddish term for the male sex organ, yet it appears all of the time in the media as an American idiom for a jerk. Can one use it in polite company?
As Bruce said, the word "schmuck" may be more familiarly used for "jerk" today. (The TV show Golden Girls used it regularly to refer to Stan, the ex-husband of Bea Arthur's character, Dorothy.)
But since you asked about "polite company", I would take it a little further and suggest that name-calling or referring to someone as "jerk", "idiot", "bimbo", etc., is just not considered polite and all such words, including "schmuck" should be avoided in those social settings.
Leo Rosten, in his classic (and funny) book, The Joys of Yiddish (McGraw-Hill 1968), says the word schmuck is defined first as an obscene reference to the penis: "Never use schmuck lightly, or in the presence of women and children. Indeed, it was uneasiness about schmuck that led to the truncated euphemism shmo ....", wrote Rosten. Ibid. p. 361. A secondary definition was "(Obscene) A dope, a jerk, a boob; a clumsy, bumbling fellow."
It seems to me that the word's status as an obscenity has lapsed. Merriam-Webster.com leads the definitions with "jerk," acknowledges the Yiddish definition as the origin, but drops the indication that the term is an obscenity. Moreover, newspaper editors have been bold enough to use the word in headlines.
This change appears to be confirmation of the prophecies of Lenny Bruce, in his stand-up routine, and Allan Sherman, in his 1973 book, The Rape of the A.P.E (American Puritan Ethic : The Official History of the Sex Revolution, 1945-1973: The Obscening of America, an R.S.V.P.) (Putnam Publishing Group), who said that if you say an obscene word enough times, it will lose its shock value and come into common usage without raising any eyebrows.
Nevertheless, I would still refrain from using the term among older Yiddish speakers.