I think that this is very serious, and family counseling would be the best thing. There could be a thousand different reasons behind this behavior -- your husband sounds jealous of your son... maybe he has other things going on in his life?? work stresses?? maybe he feels unappreciated at home and is taking it out on your son?? There are so many possible answers to the cause; meanwhile, your son is being emotionally beat up on a regular basis which is definitely not good for his growing-up process.
If it were me (which it actually was years ago) I would go get professional help (I didn't because I was clueless, and I ended up leaving the man; my son turned out pretty good). Your husband needs someone else to convince him of the potential long-term damage he is doing to the boy so that he will stop and then find another outlet for whatever ails him. Once he backs off then you will no longer feel the need to protect him, and then your husband will stop feeling jealous.
But I really think that outside counseling would be the best answer at this point. Also, do you ever listen to Dr. Laura? she deals with this subject frequently: she's on AM radio 1520 at lunchtime.
When adults resort to name-calling it generally signifies a serious problem/issue that desperately needs to be dealt with.
I sincerely hope that things turn around quickly in your home!