WASHINGTON -- The U.S. Senate yesterday held a divisive first hearing on overhauling the Social Security system, as President Bush wound down a 60-day blitz of the country aimed at building support for private retirement accounts and opponents of the president's plan held boisterous rallies across the nation.

At one point, the normally unflappable 71-year-old chairman of the Senate Finance Committee, Iowa Republican Charles Grassley, erupted.

"Those of you that are bad-mouthing every other suggestion out there, suggest your own plans," he said. "Doing nothing is not an option, because doing nothing is a cut in benefits. Grandpa Grassley gets Social Security, but my granddaughter, when she retires 56 years from now, if we do nothing, is going to get this cut that you're talking about."

Sen. John F. Kerry, D-Mass., who lost to Bush in the 2004 election, said it was the president who had failed to put a plan on the table. Referring to a proposal he made during his bid for the White House, Kerry called for repealing Bush-era tax cuts for the nation's top wage-earners to help shore up Social Security's finances.

"We're going to do something," he said of the need to address Social Security's long-term financial problems. "We're not going to do nothing."

The 20 members of the committee heard from experts supporting various proposals, but it was quickly evident there would be no easy meeting of minds. The nine Democrats stood united against private accounts and more than one Republican expressed doubts about the president's approach. Eleven votes will be needed to send Social Security legislation to the full Senate for consideration.

Urging support for private accounts, Grassley said, "If there is ever going to be a bipartisan consensus for reform, the process must begin in this committee, and there's no time like the present to get started."

The ranking Democrat, Sen. Max Baucus of Montana, countered that there was no point in negotiating solutions to Social Security's long-term financial problems unless private accounts are taken off the table. He said moving to private accounts would increase costs in the short-term and put benefits at risk in the future.

Michael Tanner, director of the Cato Institute Project on Social Security, argued that Congress should allow workers to set up and manage their own retirement accounts and pass any leftover funds to their heirs. He said the rate of return historically is better in the stock market than for Social Security.

Peter Orszag, senior fellow at the Brookings Institution, argued against private accounts saying they would drain money used to pay current benefits. He suggested that Congress reintroduce some level of estate tax and set aside a certain portion of the proceeds to improve Social Security's long-term financial outlook.

Not all the skepticism came from Democrats. Sen. Olympia Snowe, R-Maine, pointed out that Social Security keeps 56 percent of the elderly people in her state from falling into poverty. "It is defined, and it is guaranteed. Do we want to tamper with it and incorporate the element of risk into the program by diverting money from the payroll tax to support personal accounts?" she asked.

Sen. Rick Santorum, R-Pa., countered that Congress must do something sooner rather than later and ridiculed Kerry's statement that simply repealing Bush's first-term tax cuts would provide enough money to keep Social Security solvent for decades to come.

At a rally nearby on Capitol Hill, several hundred opponents of private accounts gathered to hear labor leaders, women's rights advocates, senior citizens and lawmakers shout their opposition to Bush's plan. It was one of about 30 such events across the nation.

Bush has not yet offered a detailed Social Security proposal but has been barnstorming the country for two months to build support for private accounts. Yesterday he was in Galveston, Texas, where county employees have opted out of Social Security and rely on private retirement accounts. He was traveling with embattled House GOP leader Tom DeLay of Texas in a gesture of support as the lawmaker faces mounting questions about whether he has violated House ethics rules.

"What's important here is the philosophy behind what Galveston County is doing. You can own your own asset and watch it grow," Bush said. "You also get a better rate of return, and you trust people."

But Sen. Barbara Boxer, D-Calif., said in Washington that a study of the Texas program showed that Galveston employees would have been better off keeping their money in the Social Security system.

"It's easy to fix this [financial] problem. Just say to the people who are in the wealthy categories, pay a little bit more for your Social Security. That's what 70 percent of the people think is fair, and that's what I think is fair, and that's what we can do."

In a sold-out speech at the National Press Club, Sen. Barack Obama, D-Ill., accused Bush of a "manufactured panic" in portraying Social Security as in a state of crisis.

"After a lifetime of hard work and contributions, do we tell our seniors they are on their own? Is the dignity of life in their later years their problem or one we all share?" he asked.