Cream butter, cream cheese, and sugar until light and fluffy. Beat in egg yolks and vanilla. Gradually add in flour. Divide dough in half. Wrap in plastic wrap and refrigerate atleast 2 hours.
Prehat oven to 350° F. On a lightly floured surface, roll each portion of dough to 1/4-inch thickness. Cut with floured cookie cutters. Place 1 inch apart on greased baking sheets. Bake until set about 10-12 minutes. Cool on pans 5 minutes. Remove to wire racks to cool completely.
For frosting: Beat butter, shortening and vanilla until blended. Beat in fonfectioners; sugar and enough milk to reach spreading consistency; beat until light and fluffy, 3 minutes. If desired, add food coloring. Frost cookies. Keep frosting covered with damp towel to prevent it from drying out.