Cake:
1/2 cup butter or margarine, softened
1 1/2 cups sugar
1 teaspoon vanilla extract
1 tablespoon white vinegar
3 large eggs
1 (1-ounce) bottle liquid red food coloring
2 1/2 cups all-purpose flour
2 tablespoons cocoa
1 teaspoon baking soda
1/2 teaspoon salt
1 cup buttermilk

Frosting:
1 (8-ounce) package cream cheese, softened
1/2 cup butter or margarine, softened
1 (16-ounce) package powdered sugar
1 1/2 teaspoons vanilla extract

For the cake:
Beat butter at medium speed with an electric mixer until fluffy; gradually add sugar, vanilla, and vinegar, beating well. Add eggs, 1 at a time, beating until blended after each addition. Add food coloring, beating until combined.
Combine flour and next 3 ingredients; add to butter mixture alternately with buttermilk, beginning and ending with flour mixture. Beat at low speed until blended after each addition. Pour into 2 greased and floured 9-inch cakepans.

Bake at 350° for 20 to 22 minutes or until a wooden pick inserted in center comes out clean. Cool in pans on wire racks 5 minutes; remove from pans, and cool on wire racks.

Spread Cream Cheese Frosting between layers and on tops and sides of cake.

To make the frosting:
Beat cream cheese and butter until creamy; gradually add sugar and vanilla, beating well.