The Simpson family are trying unsuccessfully to get Maggie to speak, inspiring Marge to share the story of Lisa's first word.
The story flashes back to March 1983 where Homer, Marge and Bart originally lived in an apartment on the lower east side of Springfield. Homer and Marge had to cope with Bart, who was two years old at the time. Marge reveals to her husband and their son that she's pregnant again, and points out to Homer that they will probably need a bigger place. After viewing several unsuitable properties, they buy a house on Evergreen Terrace with a $15,000 down payment from the sale of Grampa Simpson's house.
In 1984, the Simpsons move into their new home and meet their new neighbors, Ned Flanders and his family. Meanwhile, Krusty the Clown begins a promotion for the 1984 Summer Olympic Games with his Krusty Burger chain, a scratch-and-win game in which people scratch off the name of an event from the game card and if the United States wins a gold in that event, they win a free Krusty Burger. However, Krusty is told that the game cards are rigged so they only contain events in which "Communists never lose". Shortly thereafter, Krusty is told of a boycott of the Games by the Soviets and their allies and that he stands to lose $44 million on the game.
Bart is forced to give up his crib so it can be used for the baby. Homer builds him a new bed shaped like a maniacal clown, which terrifies Bart. When Lisa is born and gets all the attention, Bart takes an immediate dislike to her. Eventually, he is about to run away until Lisa says her first word, "Bart". Thrilled that his name is his sister's first word, Marge explains to Bart that Lisa adores him. He accepts her as his little sister and they both find it funny that they each call Homer by his name, rather than "daddy" as he wishes.
Back in the present day, Homer takes Maggie to bed, commenting on how the sooner kids learn to talk, the sooner they learn to talk back, and tells Maggie that he hopes she never says a word. But as soon as he turns off the light and closes the door, Maggie takes her pacifier out of her mouth and utters the word "daddy", before going to sleep. This takes on added significance because as shown earlier in the episode, when both Bart and Lisa first learn to speak, they address their dad for the first time as "Homer" and not "daddy" as Homer tries to admonish against the use of his first name.