Poot returns to the streets after a 15-month stint in jail (having been arrested alongside Avon Barksdale and many of his lieutenants and soldiers in "Mission Accomplished"). Bodie tells him about how Marlo was able to threaten the crew into working under him, but Poot does not mind the change of leadership, stating that one boss is the same as the next. Sergeant Thomas "Herc" Hauk and Detective Kenneth Dozerman pull up in a patrol car, looking for Little Kevin to question in Lex's murder. Nobody tells Herc their names. Recognizing only Bodie and Poot, he says everyone under 5'6" and 150 lbs. goes into the wagon, and the four smallest corner boys are snatched up. Not realizing that Kevin's nickname is a joke on his portly size, Herc and Dozerman leave the real Little Kevin on the street as he, Bodie, and Poot leave the scene amused at Herc and Dozerman's stupidity.
Bodie and Poot delineate for Namond the new corners for him to work, having been pressured by Namond's mother, De'Londa. Bodie insists that Namond keep his mother from interceding on his behalf.
As they work their corner, Sergeant Carver and Officer Colliccio catch Namond's crew unprepared. The corner boys flee but eight-year-old Kenard isn't fast enough to escape. Carver destroys the stash of vials and lets Kenard go, claiming that it is not worth processing. When Carver catches up with Namond, Donut, and Kenard at Cutty's gym, he chastises them for being so careless and warns them that the next time he catches them dealing drugs, he will beat them and send them to be processed for juvenile detention.
Tommy Carcetti attends a meeting with city leaders to inform him of the issues facing Baltimore as he heads toward his mayoral term. On the matter of growing the tax base, Carcetti raises the idea of adding casinos to the waterfront, but it is shot down, and he decides on building a promenade by the harbor instead. The city council president, Nerese Campbell, finds it suspicious that Carcetti wants to give a pay raise to the position of commissioner, given Ervin Burrell's recent poor performance, and explains how such a raise will never make it into the budget. Later, in private, Campbell tells Carcetti that Clarence Royce, the outgoing mayor, had groomed her to be his successor. She seems angry at both Carcetti and Gray for jumping the line to take Royce's position as Mayor as they sat below her on the city council. Carcetti admits to being ignorant of this relationship, and hints that she may become mayor, being first in the line of succession, if he decides to run for Governor in 2008.
Carcetti, Norman Wilson, and Delegate Watkins agree that firing Burrell is off the table because of the potential backlash of his black voters at the idea of a white mayor firing a black police commissioner. Carcetti tries to coax Burrell into stepping down, but Burrell understands the racial situation the mayor-elect is in attempting to get rid of Burrell, and refuses to leave quietly claiming that he will only do so if he is fired. Instead, Carcetti tells William Rawls that Burrell is to undertake no initiative as Commissioner without clearing it through him first. He then requests two promotions: Stan Valchek to Deputy Commissioner of Administration for helping him throughout the campaign, and Major Cedric Daniels will become C.I.D. Colonel, filling the late Ray Foerster's position. Carcetti claims that he wants to give Daniels carte blanche to reform the investigative units. Daniels tells Rhonda Pearlman that there's a chance Baltimore might be able to turn itself around under the new administration. She, Carver, Greggs, and Sydnor are present at the promotion ceremony. At the promotions Burrell, uninformed of who has been promoted claims to Rawls, "Valchek we could've guessed, he's Carcetti's man, but Daniels...?" as Rawls walks away. Seeing the back door promotion, Burrell now realizes that with Daniels, Carcetti has an eventual African American replacement for him as police commissioner.
Bubbles tracks down Kima Greggs and tells her about the other junkie who has been assaulting and robbing him constantly. She tells him that, as a homicide detective, there is little she can do for him, but offers to put him in touch with Herc. The latter meets Bubbles and tells him he's looking for Little Kevin. Bubbles reuses his "hat trick" from season 1, visiting Bodie's crew, pretending to sell hats, and placing a red hat on Kevin as Herc watches from a distance. As Herc and Dozerman see the red hat go onto the real Little Kevin, the fattest member of the crew, they both display a shock of stupidity having not realized that Kevin's nickname was flipped on them. In return, Herc promises Bubbles to come within five minutes the next time his aggressor shows up again.
That night, Bubbles catches sight of the assailant in an alley. He quickly phones the major crimes unit from a payphone and leaves a message with Dozerman for Herc to come immediately. Herc is busy interrogating Little Kevin, whom he has brought in for questioning over Lex's murder. Herc gets Bubs' message and tells Dozerman to call Bubbles back and tell him to wait until tomorrow, forgetting that Bubs has no cell phone. Bubs sees a police car come down the street and makes his move, announcing his presence to his tormentor. But Herc is not in the car, and the driver does not see the two dope fiends' altercation. Bubbs is once again badly beaten by his antagonist.
Meanwhile, Herc's interrogation of Little Kevin is fruitless. In an attempt to get Kevin to admit to witnessing the murder, Herc tells him that he's already talked to an informant who places him at the crime scene. When Kevin inquires if Randy is the person that has talked to, Herc tips his hand by not making any inquiries about the name. Detective Sydnor leaves in disgust at Herc's attempt to interrogate Little Kevin. Sydnor tells Dozerman that they aren't going to get anywhere as they have no charges against him to use as leverage, which Sydnor believes from past experience is key to making an interrogation work.
Prez sets his math class to work in groups. Watching Dukie use the class computer, Randy discovers that he can buy candy online in bulk and increase his profits, but he needs a credit card. They ask for Prez to order the candy with his card, stating that the business helps improve his arithmetic. Prez agrees on the condition that he receive the cash upfront, but warns Randy and Dukie against selling drugs to get the money more quickly.
As he and Dukie pass men playing craps in the alleyway after school, Randy decides to wager money. Putting the probability skills he learned in class to work, he wins big and has enough cash to present to Prez the next day. Prez is not happy that Randy gambled, but orders the bulk candy anyway as promised.
At a faculty meeting, Assistant Principal Marcia Donnelly announces that all teachers, even those in math, will help their students prepare for the reading comprehension portion of the standardized tests coming in the spring. The new material is meant to teach the students how to answer the test questions correctly, but is repetitive and leaves the students unable to grasp any of the language concepts they are supposed to be learning. The sole purpose is to improve the school's test scores. Prez draws a comparison with "juking the stats" in the police department. His class is bored by the new material, and their practice test answers show that none of them understand it.
School pilot program
Elsewhere at Tilghman Middle School, the special class presents a teamwork challenge to the "corner kids." They are divided into groups and made to assemble model buildings from kits, with no instructions included. Howard Colvin promises a dinner downtown to the group that builds its model the fastest. Namond, Zenobia, and Darnell build a seemingly sturdy Eiffel Tower, with Namond pocketing the pieces that didn't appear to fit anywhere. Colvin is suspicious but declares them the winners.
True to his word, Colvin takes the three students to Ruth's Chris Steak House, a high-class establishment by the waterfront. The evening starts well, with Namond appreciating Colvin's Billie Holiday music and the students looking forward to a new experience. But once inside, Darnell and Namond find the atmosphere overwhelming and fail to grasp the restaurant protocol. After they finish dinner and leave the steakhouse disappointed, all three refusing Colvin's offer to take a picture, Darnell asks to go to McDonald's for french fries and Namond cranks up hip-hop on the radio over Colvin's protestations.
The next day, Colvin discusses the experience with Dr. Parenti. He tells them that the students were capable of behaving well and enjoying something new, but reverted to their "corner kid" ways without even realizing it once they felt stifled. Parenti notes that this lack of self-awareness on the kids' part is a barrier to future progress. Colvin then sees the group boasting to the rest of the students that the dinner was amazing.
Kima is surprised and delighted to find how well working overtime in homicide pays. She goes to her old apartment to visit her ex-girlfriend Cheryl and their son, Elijah, and pay overdue child support. Kima hopes they can get back together, but just then Cheryl's new partner, a lawyer named Nancine, appears. Kima exits, and Cheryl has Elijah wave goodbye to "Aunt Kima."
Proposition Joe informs Marlo that Herc is now working for the Major Crimes Unit, and mentions that they were the same unit that brought down Avon Barksdale and Stringer Bell. He advises Marlo, who has been discarding his cellphones regularly, to quit using them entirely. Marlo and Chris immediately toss one of their phones out of their SUV.
Chris Partlow and Snoop have successfully driven off the New York dealers. Chris has learned that Omar has been transferred from the city jail. Marlo informs him that the charges against Omar have been dropped. Since Old Face Andre has closed shop, Marlo and Chris deduce that he recanted his previous testimony and went into hiding. Finding Andre is now their top priority. Chris and Snoop break into Andre's house and threaten his girlfriend, who swears she does not know his whereabouts. Marlo's soldiers believe her and decide not to kill her.
Andre (unaware of Marlo's membership in Proposition Joe's co-op) has gone over to East Baltimore to ask Prop Joe to help him leave town until he is safe from Marlo's wrath. Prop Joe offers him $2000 and a ride to a northern city in exchange for Andre's convenience store. Andre says this is undervalued, but Prop Joe points out that Andre is not in a position to bargain.
Later, Marlo pays Prop Joe for his package. He expects a discount for dealing with the New York threat, but Joe claims this has already been factored into the cost. Joe, however, indicates to Marlo that "something that you want" is about to be returned at no cost.
Slim Charles picks up Andre but instead of escorting him out of town, he stops at the vacant houses. Chris and Snoop are there with their lime and sheeting. Andre begs Chris to shoot him in a place where his family will find him, but Chris insists that "here is good", loads his pistol, and walks Andre up to one of the houses.
Michael continues to be disturbed by the return of Bug's father. He shoos Bug from the room when the man enters, and refuses to be touched by him in any way. Michael asks Randy and Dukie what will happen if he calls social services. Randy says they will split him and his brother up and put them in group homes, and won't simply take away Michael's stepdad like he wants. Out of options to protect his brother, Michael is escorted by Dukie to Marlo's courtyard, and is allowed to enter. Hoping to find Chris, he instead addresses Marlo face to face, telling him that "I got a problem I can't bring to no one else."
Omar is released from the county jail he'd been transferred to. Bunk is waiting for him, and feels that Omar is insufficiently grateful. He demands that Omar promise not to kill anyone in revenge for his false imprisonment: "no more bodies on this." Omar gives his word as his bond. Bunk offers a ride to the train station, but Omar insists on staying in town because he does not know anything else besides Baltimore.
Omar and Renaldo wait in a car in front of Andre's store, with Omar assuring his boyfriend that he intends to keep his promise to Bunk, but that merely threatening Andre with a gun should be fair game. When it is clear Andre is not present (having gone to see Proposition Joe), they leave.
Omar and Renaldo end up staking out the public square where Marlo spends much of his time, in the hope of catching sight of him, whom they only know by name and not face. They recognize him from the card game they robbed, and realize why Omar was framed. Renaldo is concerned when he notices Marlo meeting with Michael, but Omar dismisses Michael as "just a kid".