What? How can anyone in their right mind be upset over this? It’s a literary reference, people:

Gov. Mitt Romney has apologized for referring to the troubled Big Dig construction project as a “tar baby” during a fundraiser with Iowa Republicans, saying he didn’t know anyone would be offended by the term some consider a racial epithet.
[…]
Black leaders were outraged at his use of the term, which dates to the 19th century Uncle Remus stories, referring to a doll made of tar that traps Br’er Rabbit. It has come to be known as a way of describing a sticky mess, and has also been used as a derogatory term for a black person.
“Tar baby is a totally inappropriate phrase in the 21st century,” said Larry Jones, a black Republican and civil rights activist.

If you are a Republican you can’t say it, but if you’re the Boston Herald you can:

Fehrnstrom produced copies of editorials and columns from Boston newspapers using “tar baby” in a context similar to Romney’s. One example from 2004, a Herald editorial, used the term about the Big Dig itself.
“It just goes to show you that not everyone is aware the term is considered offensive to some people,” he said.

(Link via Drudge Report)
Updated: here.