When Jeremy Hawke's sister, Olivia Newton Hawke, visits New York, Jay meets her and is smitten with her which puts his relationship with Alice on the line when she begins to feel left out. So Jay then must decide who he really loves.

Margo gets a new neighbor, Johnny Wrath, who is the lead singer in the rock group, "Nuns in a Blender". Margo falls in love with him but doesn't feel the relationship is right when she finds him with another girl. Meanwhile Alice tries to find a suitable preschool for Penny.

Jay and Marty begin to feel a little big so they enroll in a weight loss camp. Marty loses a remarkable amount of weight which makes him feel more self- confident but when he is placed as the star in a school play, he doesn't feel his skinny self is right for him. Meanwhile, Jay receives a death threat from Belgian actor Jean Paul Le Pope whose movie he panned.

When Jay helps Marty become class president, Duke decides to have Jay help him become US President.

At Marty's slumber party, Jay is asked to tell his story in which he got caught up in the Gulf War. Jay tells how he was attending an Iraqi film festival and eventually was thrown in jail where he escaped and lead a troop of men across the desert.

Franklin and Eleanor celebrate their 40th anniversary by going on vacation but the plane crashes and Franklin and Eleanor find themselves marooned on an island. Back in New York, Margo and Jay find out about their disappearance and discover they have willed Jay their entire fortune which Jay decides to put to use by cleaning up New York.

Jay is hosting his 10th anniversary show held at Carnegie Hall where he showcases a number of movie clips from old episodes such as Jurassic Park 2, Every Which Way but Lucid, and Rabbi P.I. The show is later held hostage by a number of terrorists who threaten to blow the place up with a bomb tied to Jay's waist. Fortunately, everybody is eventually rescued by Milton Berle.