Cookies: Combine butter, sugar, egg, extracts, and milk in large bowl. Stir in flour and baking powder; mix well. Cover with plastic wrap and refrigerate until firm (about 2 hours). Heat oven to 400ºF/205ºC. On lightly floured surface, roll dough one third at a time to 1/4-inch/5-mm thickness. Cut with floured cookie cutter. Place 1 inch/25 mm apart on ungreased cookie sheets. Bake for 6 to 9 minutes or until edges are light brown. Immediately remove to wire rack to cool.
Frosting: Combine all ingredients; beat until smooth.