Offtopic but seriously? $50/hr is low? I've had people tell me that my rate is too high when i was charging $20/hr. I find that a lot of people treat freelancers with a lot of prejudice because of their geographical location..
To the OP. The programmer is black-mailing you. That never ends well. If you can, just scratch the project and start over.
$20/hr is high? I'm sorry, but you're working for the wrong people. There will always be people who want you to make them a full-featured website with forums and interactive crap for $500. Ignore these people - ignore anyone who doesn't know how much your work is worth. Working with them is just asking for trouble.
To the OP. The programmer is black-mailing you. That never ends well. If you can, just scratch the project and start over.