Grandpa gets a tank, Homer borrows it, and a nuclear situation between Springfield and Shelbyville is triggered.
Lisa is asked to help Grandpa do his taxes after he nearly gets a heart attack from the IRS ninjas (luckily, one of them called the hospital). When she discovers that there is a money surplus in his favor due to an error, Grandpa visits the IRS to collect. Instead of a check, he is offered a pick from the government's storage closet. Grandpa spots a tank that he had driven during the war (he had run over Bob Hope in it, whose golf club is still stuck in the treads) and takes it.
Homer is very quick to use and abuse Grandpa's new tank and drives it to work, which gets Mr. Burns in a nostalgic mood when he sees it. He recounts the years he spent at war with his rival Aristotle Amadopoulos (though they mostly paid France and Canada to fight it) before calling a truce. In Shelbyville, Amadopoulos and his aide Fredericks sees the tank on his hidden Springfield cameras and declares war on Burns and Springfield for breaking the truce.
A nuclear Cold War quickly falls between both cities, and attempts to stop the mounting tension do no good as neither of the old tycoons refuse to back down. Smithers is ultimately forced to step in (he draws the line at Armageddon) and asks Lisa and Grandpa for help in calling a cease-fire. An intervention is staged, and Burns and Amadopoulos decide on Grandpa's suggestion that the war between them will be settled in a man-to-man fight... between Smithers and Fredericks.
The war is called off, Smithers wins the fight, and the nuclear stockpiles are sold off to the highest bidders. However, both power plants have been suspended from use as a punishment for their owners nearly starting a nuclear war. To power Springfield in the meantime, Mr. Burns has ordered his employees to run in giant hamster-wheels.