Following are excerpts from the transcript of the April 12 meeting of President Reagan's Military Manpower Task Force at the Pentagon. It was chaired by Defense Secretary Caspar W. Weinberger.

Maj. Gen. Thomas K. Turnage (ret.), director of Selective Service: Something else that has become a very profound issue in recent weeks has been this business of withholding federal benefits. And I should suggest that we looked into that, and, at first blush, we had the impression that the numbers involved were not sufficiently significant to justify the administrative followup that would be necessary in order to determine it.

However, now we find out that by age group--18, 19 and 20--those that we are particularly interested in--we have something like 1.1 million involved in that. For example, we looked at the areas of federal employment, unemployment compensation, VA (Veterans Administration) dependent benefits, Social Security survivor benefits, CETA (Comprehensive Employment and Training Act) program and student loan and grant program . . . .

Edwin Meese III, counselor to President Reagan: You could have a line on each of the applications: have you registered for the draft? And if they put no, then you withhold their benefits. If they put yes, then you get a few that have done it fraudulently; you can kick them off their benefits and prosecute them.

Turnage: Some congressman has a bill in the Congress now relating to this fact. Sen. Hayakawa called last week. He is interested in withholding all educational benefits which is substantial. You are talking in terms of something like 600,000.

Meese: Just having that question on there might make them think twice . . . .

Weinberger: How many are now subject to prosecution?

Turnage: Something just a little less than half a million, sir.

Weinberger: And it is not going down, I take it, in total numbers?

Turnage: Yes, sir.

Weinberger: It is?

Turnage: At the end of December it was over a million . . . .

Weinberger: Have we had any prosecutions?

Turnage: The minute that we determine precisely whether they didn't register during the grace period we spoke about, they are the ones that Justice will go after. We think a few cases will get the word out that we mean business, and we think we are going to have all kinds of business . . . .

Meese: Does the person who has registered for the draft have a number?

Turnage: Yes, sir. It the letter from Selective Service acknowledging the registration has a number on it. For example, we get many inquiries these days from mothers and fathers who don't know whether or not their youngster has registered, and they say we want to confirm this. We go to the files, we give the number, and it satisfies them.

Meese: So that for federal benefits you could actually ask for their registration?

Turnage: For the number, and while they don't have the old draft card per se, they have got in effect a letter they could show, or show a number.

Weinberger: Is the failure to supply the new address subject to penalty?

Turnage: It is also a felony. We think that is overkill. However, once again we think that part of the problem with the system as we assess it has been the changes and perceptions for change, so we would like to leave it alone for the time being . . . .

John S. Herrington, assistant secretary of the Navy for manpower: When is the first felony prosecution planned?

Meese: You want to be there?

Turnage: You should be on Phil Donahue, John. No, I think it is going to be sometime in June or July. And once again the individuals who already were in the Justice files where some investigation has been made, when we determine that they didn't register during the grace period, we will notify Justice of that and those will be the guys that we go after first. So we hope in June or July.

Herrington: I may be out of sync with Ed on this. My feeling is that felony prosecutions at this time may have an awful lot to do with the anti-nuclear movement. I think we ought to proceed really cautiously on this particular point. This would be a real rallying point. I am not in principle against felony prosecutions for this.

Turnage: Let me suggest something, if I understand it correctly, and this is the Justice Department, based on what we heard--the fine is five years or $10,000 or both. However, Justice is not obligated to give that kind of sentence. They could conceivably even suspend the sentence, give part of it or either or both or gradations of it. I am not an attorney, but that is my understanding.

Meese: The only problem is that it must be a felony sentence, and they don't have a wobbler, so it would be a felony sentence.

Herrington: I think the cases should be quiet; and pick the right jurisdiction so you don't end up in New York or Chicago; and end up in Omaha or somewhere like that for your first few trials.

Weinberger: Not the District of Columbia.

Turnage: There can't be any selective prosecution, but I understand there is prosecutorial discretion, and I have got some names.

Weinberger: Actually, that is somewhat out of our hands because we could make recommendations if we wished to do so about urging Justice to exercise this discretion in view of current situations and all, but we can't interpose ourselves on them since a felony has been committed, or at least we have reason to believe it has, and so on.

There is an intent to prove in each case, and they will have to get a pretty correct case of intent . . . but the backlog, if you leave the backlog, you have got the other half of it because a lot of perception then was that the way to beat the system was not to have complied in the first place, and all the good people complying now may start to feel unhappy.