That's why it's not really called "recycling" but downcycling. It does not re-enter the "cycle". It just goes in a different (and arguably worse) landfill.
The argument for recycling is also not usually that landfills grow, but that stuff on landfills is not used for new things and the materials that are now missing have to be covered by oil, mining, etc, all the stuff "environmentalists" worry about.