I don't think you are representing the original fairly, they said

"often ... because they're at the expense of everything else,"

Which seems plausible although "often" may be harsh. Too high a proportion of your budget on art is rarely going to end up somewhere good, unless the art is the main point. There does seem to be a bit of a AAA arms race here, which isn't necessarily a net gain.

I think you're forgetting what actually makes a game at its core. What separates the medium from others are roughly these things: interaction, objectives, mechanics, feedback, challenge.

The art department can make the feedback better, the objectives clearer, the interaction easier, but fundamentally you can have a game without any art at all (see dwarf fortress, zork, etc.) and have it be a game, whereas a bunch of art assets by themselves don't a game make.

Nowadays it's all about marketing material and lying to people, so having good game art is prerequisite for great prerendered trailers that will drive preorders. But when you allocate all your budget to art, you don't end up with a game, you end up with false promises.