date('now') returns 1 year from now?

Plz forgive me if I'm missing something obvious. I just entered "select
date('now') into psql and got the following:

apx2=> select date('now');
date
----------
12-31-1999
(1 row)

Clearly today is not the last day of 1999.

The system date (`date` in the shell returns "Wed Dec 30 16:51:03 PST
1998") is correct.

(I'm running Postgres 6.4 on Linux 2.0.35.)

Thanks,
Charlie