Preheat oven to 300 degrees. In a medium bowl, combine flour, baking powder, cinnamon and nutmeg together, set aside.
In a large bowl, cream together the granulated sugar and butter until it resembles a grainy paste. Add the eggnog, vanilla and egg yolks and beat at medium speed until smooth. Gradually add the flour mixture and beat at low speed until blended. Do not over mix.
Drop by rounded teaspoons onto a greased or parchment lined baking sheets, spaced 1 to 2 inches apart. Bake for 17 to 22 minutes or until bottoms turn light brown. Be sure to keep an eye on them. Immediately transfer from pans to a flat surface to cool. If you leave them on the pan they will burn!
Eggnog Icing: In small mixer bowl, beat the confectioner's sugar and butter until well blended. Gradually beat in eggnog, until icing is smooth and the desired consistency. You may need more or less eggnog depending on the consistency you like. Frost the cookies, then sprinkle with nutmeg. Allow the icing to harden before storing in an airtight container. Yields about 3 dozen cookies