My husband DID hit Teddy but it was with a newspaper.
But honestly it wasnt very hard and I didnt think it would make him so scared. Usually we would hit the area around the pee with the newspaper and scream no or tap his nose. So anyway I guess he was too hard on him.... But on the other hand I do have good news because last night when he got home we played with him on the rug and though he was a little shy at first it seemed to have worked a little better because he did not pee. Hopefully in time he will see that if he kept peeing outside he would rule this house!
Thanks to everyone for all the great advice because although he was still a little uneasy he seems to be coming around and it has only been one day!