Which is a strange argument to rationalize their position. Is a policeman or a fireman really competing with the private sector? I am trying to think what I buy from the government that competes with the government, and I can't really think of anything. I can't buy housing, clothing, food, or cars from the government. I suppose public transportation might be one area, but there aren't really a bunch of private companies who want to run city buses, and in that case I would think the consumer would be charged a 30% sales tax, so it would be a form of double taxation to make the city also pay sales tax on the buses and drivers salary too. The whole arguement makes no sense. But it does provide some smoke and mirrors for the fairtaxers to run their magic.
"... I can't really think of anything ..."
No real surprise there ... but that means little since there are indeed private companies that either presently do - or would wish to - compete with government-provided services. Policemen/firemen may not be good examples, but take school busing. It used to be provided by private companies in many areas of the country, but now those services are provided almost exclusively by government-funded facilities - and the government has such a tax advantage that no one really believes a private firm can be cost-competitive with such a "free" (yeah, right) service.
The fact you can think of none most likely means you're not trying too hard since it doesn't fit your agenda of opposing the FairTax.
Bigun commented on this subject a number of threads ago, but you must not have been paying attention. If the government decided in all its Congressional wisdom to take up the manufacture and sale of fuel-efficient automobiles, for example, do you think that many existing private companies would be cost-competitive for very long while being burdened by a tax load that the government did not have to pay???
Well, the postal service does compete with private delivery companies. But I don't see how taxing government for its employees who must pay the FairTax (which is supposed to replace the income tax) as consumers equalizes anything.