Sift first six ingredients together in a mixing bowl. In a separate bowl, beat butter, shortening, sugar, and molasses to blend. Beat in egg, buttermilk, and baking soda.
Add flour mixture to wet mixture in increments until fully blended. Do not overwork the dough. Divide dough in two parts, shape into disks, wrap in saran wrap or parchment paper, and refrigerate until firm.
Place dough between wax paper and roll out to desired thickness. Cut with cookie cutters and re-wrap and chill dough. Preheat oven to 350 degrees. Bake cookies for 10 minutes, or until firm. Cool.
Sift powdered sugar into medium bowl. Add water as needed to reach desired consistency. Place frosting in piping bag or smooth onto cookie with a butter knife. Decorate and serve.