Event - I was at a group function with adults and kids and talking to a friend about a recent decision that instead of "retarded" it was PC to say "mentally handicapped." I think that's worse!!! "Mentally challenged" sounds better. Anyway, we started joking and I said they like to be called "retarded Americans" - then he said something like you can call them whatever you like since they're retarded and don't know the difference anyways. Then we realized a little kid was listening in. He said "that's not very nice."
Apology - People talk sh** all the time. Let's not pretend we don't. It's not meant to pick on others - it's meant to elicit a laugh from someone (yes, even if it's mean). That said, it's best to look around and see who's listening in before doing it. I'm glad the kid caught me. It let me know to be more careful and showed me he's a good, smart kid.