In a large mixing bowl, beat the butter and cream cheese until thoroughly combined.
Pour in the sugar and beat well, about 1 minute.
Add the egg and vanilla and continue to beat until light and fluffy.
In a medium bowl whisk together flour and baking powder. Slowly add the dry ingredients to the cream cheese mixture and beat until they are well mixed.
Divide the dough in half. Place each portion into a medium bowl and cover each portion in plastic wrap and refrigerate for about an hour, so the dough is easier to handle.
Heat the oven to 350°F (180ºC). Break apart the dough and roll into small balls in your hands, so they are about 1½" in diameter.
Place the balls 2” apart on a cookie sheet. Bake until the edges become golden brown, about 8 minutes.
Place a Hershey’s Kiss or Hug into the center of each cookie, lightly pressing down so they sink into the middle of the cookie. Remove to wire racks to cool.