They Might Be Kantians: Legitimate Argument for Guilt by Association?

This morning the short people and I were listening to "Flood" on the way into school. Still a great album. The ethical question in the song "Your Racist Friend" has always interested me. The song recounts the conundrum of someone at a friend's party and the host has a friend who is a racist and making ignorant racist comments. The narrator says of his host "I know politics bore you" and there is no sense that host himself harbors racist sentiments, but he "stands by his racist friend." The narrator says that he feels like a hypocrite remaining present at the party and so leaves on principle.

In refusing to condemn the friend's racism, do we have a legitimate case of guilt by association with respect to the host? Does the context matter? The host is apolitical and just trying to have a good time at his party, is he morally obliged to do more than sweep something he cares little about under the rug since it's not his fight? By not doing so, is the host entrenching and thereby indirectly supporting racism and thereby does he have a duty to do something about his friend?