This isn't really a recipe, since I just used a cake mix, but I thought I'd post it for fun.
I used a white cake mix and used only egg whites, so the lack of yolk would leave the batter as white as possible. I divided the batter into three bowls and dyed the red and blue. (The Wilton gel food coloring is the best, especially for red. The liquid drops would use sooo much!) Then I just used a spoon and added the colors one at a time, making sure to spread each layer around to the edges of the cupcake paper. I wanted mine to be red, white, blue, starting from the top, so I started with blue as my bottom layer.
You cold also do red, white, red for Canada Day!
Batter layers at various stages in the pan
1/2 cup of shortening
1/2 cup of butter or margarine
1 tsp of vanilla
4 cups of confectioner's sugar
Small amount of milk.
Mix together the shortening, butter and vanilla with an electric mixer until smooth and well combined. Add confectioner's sugar a cup or so at a time, mixing in between. Add small splashes of milk as it mixes until it reaches the consistency you want. If you are decorating with it, you'll want to make sure you don't make it too soft.