Do you mean to say we should or shouldn't be raising an error? With Inada-san's change you get this:

>>> json.loads("true", encoding='utf8')
Traceback (most recent call last):
  File "<stdin>", line 1, in <module>
  File "C:\Users\ammar\workspace\cpython\lib\json\__init__.py", line 359, in loads
    return cls(**kw).decode(s)
TypeError: __init__() got an unexpected keyword argument 'encoding'