It does sound to me like your father-in-law was baiting you. He knows your politics. He knows you have relatives who are not Caucasian. Knowing that and continuing to belittle people was verbal aggression on his part. No one should have to put up with that in their own home.
You and your husband need to find ways to set conditions for his participation in your family that are firm and clear but kind. I hope his love and interest in his son and family is bigger than his hatred of people who are different from himself.
I understand that taking a stand will be difficult for both you and your husband, especially since neither one of you likes confrontations. Counseling has many, many uses. It isn’t intended to be used only when things are falling apart. Sometimes it is a helpful environment for talking about things that are difficult to talk about. A skilled counselor can help you and your husband hear each other’s concerns and work together to manage this very difficult situation.
I wish you well.