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.