Public debt levels have reached historical highs, reigniting concerns about whether fiscal policy can still provide effective macroeconomic stabilization. This Policy Brief presents new empirical and theoretical evidence showing that fiscal multipliers decline when public debt is high because larger debt stocks lower households’ intertemporal marginal propensities to consume (iMPCs). Combining reduced-form estimates for the United States and OECD countries with a quantitative Heterogeneous-Agent New Keynesian (HANK) model, the analysis demonstrates that higher public debt raises equilibrium real interest rates and shifts wealth toward low-MPC households. These forces reduce the responsiveness of consumption and output to fiscal stimulus. The findings highlight that the composition of debt holdings and the distribution of wealth — not merely the average debt-to-GDP ratio — are crucial for understanding the effectiveness of fiscal policy in high-debt environments.