Bake cake in cupcake pan according to package instructions. Allow to cool.
Using a fork, poke holes in the top of the cupcakes.
Mix together the blue and red gelatin each with 1 cup of boiling water until dissolved, and then spoon each color gelatin over the cake, making sure to pour over the holes. The best way to do this is a row of blue, then a row of red and alternate so you get a colorful mix of red and blue in the cake. It's good to spoon over each row 2-3 times for good coverage.
Next, cream together cream cheese and butter, and then add in the powdered sugar with 2 teaspoons of vanilla. Divide into 3 equal portions and add red food coloring to one and blue to another one, adding a couple drops of food coloring at a time until you get to the desired shade.
Add frosting to a tri-color decorating bag to make a red, white and blue frosting design on the cupcakes.