WASHINGTON — President Obama will propose breaching statutory spending caps in the fiscal year that begins in October, putting out a budget Monday that raises spending at Congress’s discretion by $74 billion — or 7 percent, the White House announced Thursday.

With the era of falling budget deficits coming to an end, Mr. Obama and Congress are hurtling toward a major fiscal clash over spending as the White House and Democrats press for an easing of fiscal spending austerity just as Republicans redouble efforts to balance the budget.

The president’s budget would raise military spending next year by $37 billion over caps set in the 2011 Budget Control Act, a measure reached after hard-fought negotiations with the new Republican-led House. Domestic spending would rise $38 billion over the cap for fiscal 2016.

While both sides say they are trying to aim their policies at the squeezed middle class, the divide between the two parties on actual fiscal policy may be as stark as any time since Bill Clinton’s first term and government shutdowns of 1995 and 1996. Since then, Washington policy makers have been focused either on issues like national defense, financial crises and recession or at least on professing a common goal of balanced budgets and fiscal rectitude.